Huge players like Apple and Google are sparring with each other to provide smart TV via devices that converge the Internet with broadcast and cable; and some scrappy start-ups have entered the ring as well. So far, each offering still has limitations.
Last week, Boxee, a Silicon Valley newcomer, announced that, in addition to offering on-demand movies from Wal-Mart’s Vudu service, the company now offers Netflix streaming on its Boxee device. The $199 “Boxee Box” by D-Link plugs into a user’s TV with the included HDMI cord and connects to the Internet via wireless or Ethernet. (For more, see Boxee, the New Kid on the Block).
Andrew Kippen, Boxee’s VP/Marketing, says his company is in talks to bring Hulu Plus on board, and that Boxee won a contract with U.K. TV-catch-up provider SeeSaw, as well.
"This past fall, we saw Apple TV competing at a $99 price point," says Kippen. "Google TV was at $299. We see ourselves nicely positioned in the middle."
The setup of Apple TV is similar to that of Boxee: Just plug the power cord into the wall and connect the small Apple TV device to the TV using a HDMI cable, which is sold separately. Streaming is done wirelessly.
"Apple is good if you want to get everything from iTunes and Netflix," Kippen adds.
Actually, Apple also has content arrangements with ABC, Disney, Fox and the BBC, but it’s certainly not a cable killer at this point. And its recent announcement that it would be taking 30 percent of all subscription fees from video partners through its iTunes store may have a chilling effect on future content negotiations.
On the other hand, Kurt Scherf, VP/Principal Analyst at Parks Associates, says Apple has a lot of video content that can be purchased on an a la carte basis through iTunes, and he says Apple’s multi-platform capability is a key differentiator and benefit for that company. Consumers who have other Apple devices, like iPads or iPhones, can tap iTunes video content from those devices over to their Apple TVs.
"That’s an awfully nice feature," notes Scherf. "Nobody but Apple provides this feature today."
The other goliath in the alternative-TV fray is Google, which last fall introduced its Android-powered Google TV platform. Rather than attempting to negotiate with major content providers, Google made some arrangements for Google TV-optimized versions of programmers’ Web sites. These content providers include Turner Broadcasting, NBC and HBO. Google TV also offers Netflix and Amazon Instant Video apps for streaming video. (See more on Amazon Instant Video).
"Google TV is a different idea of what interactive TV should be," said Kippen. "It’s very browser-focused, with a full keyboard and mouse."
Google TV is available through two hardware options. The Logitech Revue box with companion keyboard/mouse connects to the cable or satellite box via HDMI and to the Internet via Ethernet or Wi-Fi. The price of the Logitech Revue was reduced recently to $239.99 at some online outlets, reflecting its weak sales to date. Google also has partnered with Sony to embed Google TV into an HDTV or Blu-ray player.
"They’ve elicited the fear of the major broadcasters who’ve banned access to their Web sites that stream video because they’re concerned about how their ad model gets disrupted with Google TV," explains Scherf.
Last month, another California startup – Roku – announced it had served 1 billion streams of content and had sold more than 1 million Roku units. Founder and CEO Anthony Wood said in a prepared statement, “If you think about it, our active user base now matches that of a top 10 U.S. cable company.”
Roku players start at $59.99 and stream content from Netflix, Amazon Instant Video and Hulu Plus. However, reviews of the product often note that the Roku setup process and user interface aren’t as polished as other offerings.
"Roku has done a great job of creating a value-oriented device," says Boxee’s Kippen, "but it’s missing out on a full Web experience because it has a very-low-horsepower chipset."
According to Scherf, if people really want the processing power of a computer, they simply can connect their PCs or laptops to the TV with a HDMI cable. "We know that 8 percent of broadband households are plugging their HDTVs into their computers already, which is far more than the sales of any of these products combined," he says.
He continues, "I think Roku delivers what people want today, which is watching Netflix on the TV. The computer connected to the TV will do that also, and it’s not limited to the whims of broadcasters, as in the case of Google."