The Simple.TV box will be marketed to a growing number of cord cutters that have chosen to do away with their cable packages, giving them the ability to record and stream local broadcast and basic cable channels. While it doesn’t have an HDMI output for hooking up to a consumer’s TV, it will allow them to stream to some connected TVs or other streaming devices that they might have already bought.

Simple.TV works like this: You connect the streaming set-top box to an HD antenna or cable connection, as well as to your broadband connection, and the device allows you to beam live and recorded TV to any number of mobile, tablet or connected device apps that support the box. At launch, Simple.TV will support streaming to the iPad, Roku streaming boxes, Google TV-enabled devices and the Boxee Box.

The box includes an HD tuner and converts digital video feeds to MPEG-4 streams that can be accessed by other devices. While the Simple.TV box won’t have any on-board storage at launch, it will allow users to connect their own USB-enabled hard drives or network-attached storage to record programming from available over-the-air or cable content.

The Simple.TV box will be available in the spring of this year, and will sell for $149 at launch. In addition, consumers will be offered a premium subscription package for $4.99 a month that gives them access to an electronic program guide, enhanced metadata, Series Pass-type automatic recording of their favorite shows, and the ability to stream to up to five different connected devices.

Really Simple Software, which makes the Simple.TV box, is based in Tiburon, Calif. and its founders include CEO Mark Ely, former president of Sonic Solutions (which was acquired by Rovi in December 2010) and CTO Bruce Randall, who was lead architect of Deluxe Digital’s Blu-ray streaming services and had also worked for Sonic Solutions. The startup has about 12 employees and is currently angel-funded, although it’s in the process of raising a Series A round of financing.

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Rovi announced plans to acquire Sonic on Wednesday in a deal valued at $720 million, or a 38 percent premium over its 30-day average. According to the terms of the acquisition, Sonic shareholders can choose to receive either $14.00 or 0.2489 shares of Rovi common stock for each share tendered and accepted in the exchange offer. Once that exchange offer is complete, Rovi plans to acquire any outstanding shares of Sonic common stock and make Sonic a wholly owned subsidiary.

Rovi provides metadata and electronics program guide solutions to service providers looking to fill out information about content available through their program lineups and on-demand libraries. But over the last few years, it has attempted to reposition itself to provide similar data and technology to consumer electronics manufacturers that are introducing over-the-top video services on their connected devices.

In July 2009 it introduced a new programming guide technology for connected devices called Liquid — later dubbed TotalGuide — but despite signing up some content partners for the guide, it has yet to announce many actual customers. The one customer it did announce with the rollout of the Liquid guide two summers ago was Blockbuster On Demand, which was using the guide to integrate services like YouTube and CinemaNow. But the Blockbuster technology — and CinemaNow (now called RoxioNow) video on demand service — was essentially run by Sonic, which acts as a white-label video distribution service for some major brands and CE makers.

In addition to Blockbuster, Sonic’s RoxioNow platform also powers over-the-top video services for companies like Best Buy, Sears Holdings and others, and as such has found its way onto a number of connected devices already. In its press release, Rovi says the RoxioNow platform will be embedded on more than 30 million connected devices by mid-2011. Through its acquisition of DivX earlier this year, Sonic — and now Rovi — also has access to an additional 300 million already shipped devices that support the DivX video format.

This isn’t the only acquisition Rovi has done this year: In May, it announced the purchase of MediaUnbound, which provides media recommendation technology. Now with its own metadata, MediaUnbound’s recommendation engine and Sonic’s existing footprint with device manufacturers, Rovi may finally get some customers for the program guide technology it’s been building for the last few years.

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Coinstar CEO Paul Davis said that the company spent a good long time debating whether or not to build its own digital offering or to find another company to partner with. But in the end Redbox decided that the partner strategy was the way to go, based on its ability to roll out a digital offering quickly from a technological perspective, as well as a partner’s ability to offer up a wide range of digital content without the DVD kiosk firm having to do a lot of heavy lifting in striking content deals.

While Redbox declined to name which companies it was in discussions with, it did talk about the reasons why it would be an attractive partner for any of those companies. “Consumers have told us that they are hungry for [digital content],” Davis told analysts on the call. Not just that, but Redbox customers are well-positioned to take advantage of a digital offering, with 91 percent of them having broadband connections at home. Finally, Redbox said its strong brand and extensive physical presence would also offer up a opportunity for any potential partners.

That said, it’s not clear whether Redbox would roll out a subscription service to compete against Netflix, as has been widely rumored, or whether it would pursue a digital VOD strategy to compete against rentals from iTunes and other digital storefronts. That strategy would primarily depend on whatever partner it chooses and which options are available through such a deal. With that in mind, these are probably the top potential partners for a Redbox digital offering:

Walmart

Walmart and Redbox have long been partners in the physical DVD world, with the big box retailer playing host to a number of its kiosks around the country. It would only make sense for Walmart to extend that partnership to the digital realm. Wal-mart purchased Vudu earlier this year, and the digital video subsidiary has been mainly quiet ever since. Vudu has distribution on a number of connected consumer electronics devices, and just announced today that it has struck a deal to bring Hollywood movies to the Boxee Box. With Vudu back out of its quiet mode, it wouldn’t be surprising for Walmart to leverage that asset to help out Redbox with a white-label or co-branded offering from Vudu.

Pros: A wide distribution on CE devices, a strong partnership with Redbox already.

Cons: Walmart has struggled with digital offerings in the past.

Amazon

Ever since Amazon rolled out its video on demand offering, it has struggled to gain traction in the digital marketplace, mainly playing second fiddle to Apple’s iTunes. Even so, Amazon has managed to snag some consumer electronics deals, landing on TiVo DVRs, as well as Roku broadband set-top boxes and Google TV devices from Sony and Logitech. Striking a Redbox partnership would go a long way to expanding its market clout, but it might not give Redbox the flexibility it desires from a distribution point of view.

Pros: Quick, easy access to a library of 40,000 on-demand titles.

Cons: Somewhat limited CE distribution.

Sonic Solutions

Sonic could be the dark horse in Redbox’s partner hunt; while it doesn’t have the instant name recognition that Walmart or Amazon have, it’s providing behind-the-scenes help to a number of digital storefronts already, including those from Best Buy and Blockbuster. The owner of the RoxioNow video purchase and rental offering already is embedded on a number of CE devices and would be able to turn on a branded Redbox offering pretty quickly. At the same time, a Redbox-branded storefront and content library would be competing directly against similar offerings from other Sonic partners.

Pros: Wide distribution, potential for a quick turnaround on a Redbox-branded storefront.

Cons: Direct competition against other Sonic partners.

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RoxioNow powers the digital storefront for a number of retailers, including Best Buy, Blockbuster and Sears. The addition of mobile devices will give those companies even more outlets through which to sell and rent digital videos. RoxioNow is already available through a number of consumer electronics (CE) devices, including LG Blu-ray players and TiVo DVRs, and will soon have its technology embedded on TVs and Blu-ray players from Best Buy’s Insignia brand, as well as Boxee’s upcoming broadband set-top box.

The ability to stream to multiple mobile platforms also pushes forward Sonic’s plans to enable “buy once, watch anywhere” capabilities for videos that are served through its RoxioNow platform. Giving consumers the chance to pay for a piece of content on one platform and watch it on any number of devices is seen as something of a holy grail for digital video.

Sonic and Widevine have been working to enable the option as part of the Digital Entertainment Content Ecosystem (DECE), which recently unveiled its Ultraviolet DRM framework and its plan to create a digital storage locker that would keep track of a user’s digital content and the device upon which he’d be able to watch it.

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Earlier this year, Redbox reportedly surveyed its customers as to whether or not they would sign up for an ultra-cheap, subscription streaming service along the lines of what Netflix currently offers. According to a report from High-Def Digest in April, Redbox was floating the idea of a $3.95 subscription video service that would include unlimited online streaming and four kiosk rentals a month. Redbox rentals typically cost $1 a day, so users would basically get free streaming along with their four rentals.

At $3.95 a month, a streaming offering from Redbox would be less than half the price of the cheapest subscription offering from Netflix, who plans start at $8.99 a month for unlimited streaming and one mailed DVD at a time. But a lot would depend on what kind of content is available through Redbox; in the three years since Netflix first launched its Watch Instantly streaming service, the company has grown its library to 20,000 titles. A competing offering from Redbox would most likely be playing catch-up.

Before rolling out any new online video service, Redbox would also need to build or license the technology to do so. One option would be to license technology from Sonic Solutions, which operates the RoxioNow video platform. RoxioNow is used by Blockbuster, Best Buy, Sears and others to power their online video storefronts. In addition to being accessible through PCs, it is also embedded in a number of TVs, Blu-ray players and other connected devices, which could give Redbox an instant on-ramp to the CE device space. And while existing services from Blockbuster and Best Buy are based on a rental model, RoxioNow also supports subscriptions.

The news of a streaming offering comes at the same time that Netflix is facing a competitive threat from Hulu’s Plus premium subscription offering, which was announced late last month. But Netflix isn’t sitting still; it announced today that it would expand the availability of its own streaming service into Canada later this year.

Image of Redbox case courtesy (CC-BY-SA) of Flickr user Paul Heaberlin.

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Licensing the RoxioNow platform will allow Sears to sell or rent digital versions of movies and TV shows on the same day and date that DVDs are available for purchase in retail stores. As part of its entry into the digital video market, the retailer will launch services based on the RoxioNow platform later this year in its Sears and Kmart stores.

The two companies say they will work together to get the service embedded on a number of consumer electronics devices. The RoxioNow platform is already embedded on a number of consumer electronics devices, including LG Blu-ray players and TiVo DVRs. In addition to being able to purchase content on these connected devices, the RoxioNow service enables end users to store those purchases in a “digital locker” that will allow them to access that content at a later time on a different device.

Sears is just one of many retailers Sonic has signed up to use its RoxioNow platform; both Best Buy and Blockbuster are leveraging Sonic’s digital video service for their own white-label digital video services. But Sonic — and its retail partners — face stiff competition from Wal-mart, which acquired RoxioNow competitor Vudu earlier this year.

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As part of the deal, Boxee will license the RoxioNow platform, which is the same platform used by Blockbuster for its On Demand video service and will soon be used by Best Buy when it opens up its digital storefront. With the RoxioNow platform integrated into its software, Boxee will soon be able to strike deals with content providers — like Blockbuster, Best Buy and Lionsgate — for Hollywood content.

The RoxioNow platform is already embedded on a number of consumer electronics devices, including LG Blu-ray players and TiVo DVRs, and is looking to get onto more, including Best Buy’s Insignia-brand HDTVs and Blu-ray players and Boxee’s now-delayed set-top box, as well as any other CE devices that Boxee’s software is going to be deployed on.

For Boxee, the deal comes as it looks to expand to enable payments and purchases through its media center software. After announcing plans to roll out a payment system that will enable its developers to charge for apps or other content, Boxee chose Vindicia as the payment platform for its software.

Adding payments — and new releases for purchase — could help drive revenue for Boxee, which had to delay the launch of its upcoming Boxee Box. While the recent delay in the launch of the Boxee Box is a blow to the startup, CEO Avner Ronen has repeatedly said that the company is working to get its software embedded on other consumer electronics devices, including other TVs, Blu-ray players and set-top boxes that will come to market in 2011.

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DivX technology is said to be embedded in more than 300 million devices shipped from consumer electronics manufacturers, including 8,500 different models of TVs, DVD and Blu-ray disc players, and more than 80 different mobile handsets. So Sonic will be able to leverage DivX to help advance its own RoxioNow over-the-top video service, which it’s trying to get embedded on a number of CE devices.

The firms have to date worked closely together on delivering video to connected devices and mobile phones. In December, they inked a strategic partnership for downloadable media in the DivX format, and in February extended terms of the deal to include mobile devices. In addition to running its own online video service, Sonic provides a white-labeled back-end as well as studio rights deals for digital storefronts operated by Blockbuster and Best Buy.

Sonic will acquire all outstanding shares of DivX in exchange for $3.75 in cash and 0.514 shares of Sonic common stock, or $9.83 a share, for a total value of $323 million. The deal remains subject to regulatory and shareholder approvals, but is expected to close in September. Sonic expects it will as much as double its fiscal 2012 per-share earnings on a non-GAAP basis.

The current Sonic management team will remain in place to lead the combined company, with some key executives such as CEO Kevin Hell, CFO Dan Halvorson and the company’s EVP of business & legal affairs and general counsel, David Richter staying on during a transition period. Once the deal is closed, Sonic will add two members of the DivX board to its own.

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The retailer’s download service will be powered by Sonic Solutions, which has been providing similar services for Blockbuster as well as selling downloads on its own Cinemanow.com website. However, Sonic Solutions recently announced that CinemaNow is now being called RoxioNow, and today we know why: Best Buy has bought the CinemaNow brand from Sonic and is going to exclusively use it for the download service it announced today.

Best Buy also said that it’s going to launch an “improved and updated version” of CinemaNow with an “advanced user interface and expanded video playback features” later this year. Mentioning an upcoming relaunch of the service on the day you’re announcing the launch? Now that’s what I’d call managing expectations.

Paid movie downloads have been disappointing across the board, with ScreenDigest recently estimating that the industry only made $291 million from download-to-own sales and Internet VOD in 2009. I recently interviewed Sonic Solutions CEO Dave Habiger, and he told me that things will change thanks to more titles being available online this year than ever before. Check out the complete interview below.

Update: Sonic Solutions’ SVP of strategy Mark Ely told me that the Cinemanow.com website will soon reflect the change of ownership, and explained that his company decided to give up on its consumer business and solely focus on powering other services to prevent the perception that it was directly competing with its customers’ download platforms.

Photo courtesy of (CC-BY-SA) Flickr user roblawton.

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Not shares Habiger’s optimism. ScreenDigest estimates that the industry only made $291 million from download-to-own sales and Internet VOD in 2009, according to a report from Paidcontent. ScreenDigest also lowered its expectations for future online video growth, now forecasting that the industry will only make $943 million in 2014 from Internet VOD and download-to-own sales.

Habiger was ready to admit that online video sales have historically been small, but said that there is a lot of potential for growth, given the fact that the physical disc market has been about $45 to $50 billion per year. He also added that there is going to be much more content available online this year than in previous years — and that content will be available on more and more devices.

Still, one has to wonder whether the original model of paying $4 per rental will ever work online, given the fact that it’s hardly working for your neighborhood Blockbuster anymore. Add to that the fact that Neflix is getting lots of interest for its Watch Instantly feature and Hulu is clocking more than a billion video views per month, and you have to wonder if a company like CinemaNow shouldn’t look at other models.

Habiger seemed open to exploring different models, calling subscriptions or VOD “just words that describe (what) historically (has been) a disc market.” He added that Cinemanow would be open to try any combination of existing and new models to deliver content: “There aren’t any rules that say you can’t rent something for three days or four days or put it in your digital locker for three years.”

Sonic Solutions bought CinemaNow at the end of 2008. The company has since licensed its platform to Blockbuster as well as Best Buy to power their branded video download platforms. It’s also expected to be an integral part of the new partnership between Best Buy and TIVO.

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