Roku shrinks its box, puts it on an MHL thumb drive

Roku announced the launch of a new product line of so-called Streaming Sticks on Wednesday that will enable consumers as well as TV manufacturers to add Roku’s platform to TVs simply by plugging a USB-stick-like device into a special HDMI port. Roku is partnering with Best Buy (s BBY) to sell the stick together with the retailer’s Insignia TVs, but it will also make it available separately to consumers by this fall.

Roku’s Streaming Stick will essentially offer the same capabilities as its current lineup of set-top boxes but with a much smaller form factor. The stick will be about as big as a USB flash drive, Roku CEO Anthony Wood told me during a phone conversation on Tuesday. Roku’s stick makes use of Mobile High-Definition Link (MHL), a new display-port technology that was originally invented to connect cell phones to HD TV sets. MHL is self-powered, so Roku doesn’t need to ship the device with any power adapter. The technology also allows users to control their Roku stick with their existing remote control.

The downside of MHL is that it is still really new. Currently only a few TV sets are supporting the standard. Wood told me that he expects many more manufacturers to jump on board this year. Of course, many of these new TV sets will also come with built-in app platforms. So why would consumers spend an additional $50 to $100 for a smart-TV dongle? Wood told me that he sees a lot of potential in lower-priced TV sets like the ones from Insignia that don’t bother with adding Google (s GOOG) TV or Yahoo (s YHOO) Widgets, and he added that a separate stick is easier to update than a solution embedded in a TV.

Roku will sell different levels of the stick, including some that will allow game play through the company’s new motion remote controls. Wood was vague on some of the details, including whether there will be an Ethernet version. However, he said that the sticks will initially ship with the same UI that is currently available on Roku’s boxes, suggesting that Roku’s UI won’t get any major refresh until this fall or later.

Roku ended 2011 with a major push to sell its new lineup of streaming media players, including a big advertising campaign, retail presence in more than 13,000 stores and a $49 priced entry-level device. However, sales of the company’s devices were well below expectations: Roku had previously estimated that it would sell a total of 3 million players by the end of the year but ended up selling only 2.5 million devices. Wood told me that he is “still very happy” with those numbers, but he cited Netflix’s (s NFLX) fall stumbles as one reason that sales may have been below its goals.