Macopinion

YASTB

by Marc Zeedar macopinion@designwrite.com

Lately it seems like everyone's jumping into the Internet television pool, with AppleTV being one of the most prominent, but so far no one has emerged the victor or even proven that there's a market. That's opened the door for Netfix, which has just announced a new set-top box to be made by Roku.

Netflix, of course, already has a successful membership of DVD renters, and their new box builds on that platform. Basically it's a device you plug into your TV and it lets you watch certain Netflix movies via your broadband Internet connection. (Actually, these are the same movies you can watch today on your Windows computer with Netflix's "Watch Now" service -- but that service is not Mac compatible and doesn't easily let you watch movies on your TV.)

So far that doesn't sound much different from AppleTV. But Netflix's system is innovative in terms of cost: instead of users having to buy or rent movies on an individual basis, you get all the movies you want for the flat-rate Netflix subscription price you are already paying. You can still keep the DVDs you're renting -- the digital downloads feature is simply a bonus.

The box itself is cheap, too: just $99, a lot cheaper than AppleTV or others. So this'll be a hit right out of the gate, right?

Well, methinks not. First, we're talking about a massive sociological shift: getting people to accept a new paradigm is not easy and you should expect some additional flack. It's just going to take time. Look how long digital music was around before iTunes made it a hit.

Second, people are wary of anything with a monthly fee. Granted, Netflix gets around that a little as their fee is part of their standard subscription packages. But that also hurts them as it will make it harder to attract new customers.

Third, and by far the biggest problem, is that the service only offers a fraction of the movies available via DVD rental, and most of them are older films. Even if everything else about the service was perfect, it's not going to do you much good if you aren't interested in any of the movies they have available. But of course Netflix will be adding movies and eventually this could be a nice-sized library and be a great way to enjoy on-demand content. It does fit into my "video subscription" model I've written about in the past which I think is the future.

Four, the Roku box does not have a hard-drive and all the films you watch on it are streamed. I question the performance of streamed media -- though my broadband connection is very good, I have run into occasional slowdowns and pauses and glitches with streaming and I just don't trust it as well as the pre-download method. With AppleTV, for instance, I can download a movie in advance and watch it at my leisure with no connectivity issues.

That said, it does sound like Netflix has thought this through a little bit: you can pause, rewind, and even stop the video and come back to it later and continue from where you left off. But I doubt it'll be as precise of control over the movie as with pre-downloaded media (even AppleTV isn't precise enough for me as I'm used to Tivo's excellent media controls).

Also, what happens if you get a phone call on your Internet phone while watching a streaming movie? What happens when other members of the household want to do other things with the Internet while you're watching a streaming movie? We won't know until we can test the service, and of course, everyone's connection is different, so what works in one part of the country might not work well elsewhere. (Though it is good to note that the box does have a 30-day money back guarantee, so you could return it if the performance was poor for you.)

Five, speaking of content, Netflix doesn't offer anything in high definition yet: supposedly that will come, but I doubt the current streamed video is even as good as DVD, though I haven't seen it or read any reviews and can't say how good or bad it is. Since HD requires so much more bandwidth, however, I doubt it could be streamed successfully and without a hard drive in the Roku box, getting HD content might not be feasible.

Six, the Roku box itself sounds (and looks) remarkably basic. That's probably good for simplicity and performance, but it does mean it is limited. For instance, you cannot browse Netflix's movie library via the device: instead you must add movies to your Netflix queue with your computer and the movies that are available via streaming then show up on your set-top box and can be selected with the remote control. Not terrible, and in some ways better than trying to browse through 10,000 items on the TV, but it could be a hassle if you want a recently added film or just want something that's not in your queue.

Seven, with so many boxes wanting to be attached to our televisions these days, where does it end? We've got cable and satellite boxes, DVRs, game boxes, DVD players, A/V systems, Slingboxes, routers, computers, video cameras, AppleTV, and more. People are suffering from set-top box overload!

I'm not quite sure this Netflix box adds enough value: it seems like Yet Another Set-Top Box. For existing Netflix customers who might have been tempted by AppleTV, the box could be a good solution. For families who'd like to always have a selection of older movies the kids might like without having to wait for a DVD to arrive, it could be perfect.

At $99, if you're already a committed Netflix user and are comfortable hooking up yet another device to your TV, it seems like a harmless addition. Why not get it just to have it as an option? But I suspect that's a fairly narrow market of Netflix users.

Brand new customers are going to want to see quality content available: the latest releases, current films, a wide variety of content. The pricing is good: but are people going to want to put up with the hassle of Yet Another Set-Top Box? And of course this one, being Internet-required, means a lot more complexity: it's not only got to fit into your existing television wiring nightmare, but it needs broadband Internet, too.

However, Netflix does have a fascinating solution to this problem: they are offering Netflix downloads as a platform and the Roku is merely the first hardware on the market. Netflix plans to work with other hardware partners to bring DVD and Blu-Ray players and other devices with built-in Netflix support. That, frankly, is brilliant: depending on how quickly that gets rolled out and the cost of those devices, I could see that being a real value-add for hardware makers. For instance, I don't have a Blu-Ray player yet, but might get one in the next year or two: if I could get one that supports Netflix, I'd be tempted. I already pay for a Netflix subscription, so I'd just be getting additional features for free. And it wouldn't add complexity to my TV setup since I'd already be needing to hook-up the Blu-Ray player.

We'll have to see where this goes. At this point I can't say which service will win. Hardware-wise the different set-top makers are somewhat differentiated, but not much. The key divider is content and costs. I'm not sure the market is quite ready for Internet-delivered video, but it's getting there: by the time people are ready, it will be a mature technology, which is good.

But the deciding factor will always be content: whichever service offers the best movies and widest selection and the best quality will win. That could be iTunes -- you'd think they have clout with their huge marketshare -- but with the media companies worried about giving Apple a monopoly, they could side with Netflix or someone else (and don't forget that the media companies prefer streaming as it's more difficult to pirate), and if Apple doesn't have the content, they can't win.

macopinion@designwrite.com