February 4, 2010

Boxee, the New Kid on the Block

Sixty to 70 vendors are expected to attend next week's CableLabs Winter Conference in Denver. Among all the familiar names will be at least one upstart: Boxee.

The company got its start organically in 2004 when its founders "hacked Xbox to play local media on their TV," said Andrew Kippen, VP of marketing for Boxee.

For those over 30 and living outside of California, "local" media refers to one's personal library of DVDs, music, photos, etc.

According to Boxee's Website, the founders became members of Xbox Media Center’s open source community and, since 2007, have worked to extend the XBMC base code with online sources like Hulu and Netflix as well as social networking in Boxee.

"Other solutions try to build a product around existing business models," said Kippen. "We're focused on customers and what the end user wants to experience."

Boxee offers much of its software for free via its apps store. Kippen said the company has about 450 apps for Internet-connected TV, social networking, and the like, which can run on Apple, Linux and Windows platforms.

The company does have a few apps that require a subscription, such as Netflix and Major League Baseball. For those apps, Boxee authenticates the subscriber, similarly to cable's TV Everywhere initiatives.

Cable Content

But Boxee has ambitions to become a bigger player in the world of content distribution.

In January, Boxee announced plans to release a payment platform this summer where users will be able to purchase video on a per-show basis with a click of their remote. The micro-payment idea is similar to buying single songs through iTunes or pay-per-view movies on cable.

The key to this strategy will be lining up some content agreements. Kippen said the company is meeting with cable programmers.

"In meeting with cable channels as well as independent producers, it always comes up that this ad-based model isn't sustainable at this moment," he said. "We want to do subscription, pay-per-view; help them get into this space not only on the Web but also on the TV screen through a new medium."

To aid with the Internet-to-TV connection, the company has also announced the Boxee Box, slated for availability in the second quarter of 2010, which it expects to sell through retail and e-tail outlets, priced around $199.

Of the "just under one million users now," said Kippen, about 80 percent are using Boxee on their TVs, usually connected with an HDMI cord.

And speaking of cords, during a recent earnings call, Time Warner cable CEO Glenn Brit said, "The reality is, we're starting to see the beginnings of cord cutting where people, particularly young people, are saying all I need is broadband."

Many of these young people aren't actually cutting their cable cord: they never had cable to begin with. The founders at Boxee are banking on that generational shift.

-Linda Hardesty