Bit Rate

Roku: Over the Top, Then Back on the Shelf

6/17/2008 1:13 AM

The most successful technology products are usually the simplest to explain and the easiest to use. 

Roku’s Internet set-top scores on both counts: It’s simple to describe the value (the $99 box lets you instantly watch a subgroup of Netflix movies on your TV) and it’s very, very easy to set up and use.

When I found out about the Roku, I had more than a professional interest in trying it out: We’re longtime Netflix users, sticking with them because of the ease and simplicity of the queue and the simplicity of a flat-rate plan versus a la carte rental fees.

But — and you knew there was a but — there are two reasons why Roku is not a serious threat to cable, satellite or telco TV distribution models.

Reason #1: The Roku experience was not mind-blowing. And if and when it does become mind-blowing, cable will have developed its on-demand products to be equivalent (or at least close enough).

It was definitely cool to plug in this tiny little box (there’s no hard disk — the video is all buffered in memory) and see about 60 of our Netflix movies pop up. Including Talking Heads’ Stop Making Sense acclaimed 1984 concert film, which is not available from Netflix on DVD but is cleared for Internet streaming.

The two biggest bummers about Roku/Netflix? The limited selection — there are few new releases available, with a notable exception being 2007’s La Vie en Rose, whose lead actress, Marion Cotillard, won an Academy Award and Golden Globe for her portrayal of Edith Piaf – and the lack of high-def titles.

We watched Cat on a Hot Tin Roof, the Elizabeth Taylor/Paul Newman classic that oozes with disquieting Southern Gothic flavor ("no-necked monsters," "Big Daddy," "Sister Woman"). The movie was great. The Roku worked fine. It was in 4:3 standard-def.

In short: We could have waited a few days for the DVD.

For now, it’s best to think of Roku as a customer-retention tool for Netflix. I’d use Roku if Netflix gave me the box for free. Is $99 worth getting this one neat feature? Maybe. HD would definitely be a cool addition.

Undoubtedly, Netflix will pump up the selection of titles and add HD video. Meanwhile, release windows for Internet distributors should move from months to weeks after DVD release (or even day-and-date).

But there’s a riptide that Roku and others will have swim against. 

Reason #2 why Roku and its kin aren’t a long-term threat: Internet service providers are moving toward metered-usage plans, or will institute clear caps on how much bandwidth subscribers are entitled to at different price points (see Time Warner Prices Usage Caps in Texas Trial).

To me, that is an inevitable development. So there’s a castles-built-on-sand feeling here, not just about Roku but about all of the over-the-top ideas out there — Amazon.com/TiVo, Apple TV, Sezmi, Joost, Vudu.

If I find out after watching Stop Making Sense that I’ve been pushed into surcharge territory with my provider, suddenly the whole thing is less appealing. 

That’s because what makes the Netflix/Roku service most attractive is that I’m able to get thousands of movies at a fixed rate rather than paying $4.99 or $8.99 or whatever for 24-hour access to a title cable VOD. 

The transport network isn’t just a "free" part of the equation. Somebody has to pay the freight.

And if Netflix, Apple, Amazon, et al., want to get a dedicated, high-bandwidth IP video stream into a cable sub’s home, they will be in the same boat as any other programming distributor who’s negotiating carriage.

Are the MSOs (and telcos including AT&T) looking at metered Internet access because of the competitive threat from the over-the-toppers?

I’m sure that has crossed their minds, and the blogosphere is rippling with this conspiracy theory. The main issue, however, is establishing an economic model for retail bandwidth pricing that makes sense.

Did anyone really think there would be a free lunch in the world of Internet video distribution?
 

October