Wednesday, January 20, 2010, 9:30 AM ET|Posted by Will Richmond
Boxee is announcing this morning that it plans to support paid options for premium video by the end of Q2. To date, Boxee has been delivering mostly free, often ad-supported, video, though users of subscription services like Netflix and MLB could also access these. The new initiative means that Boxee will process transactions itself, so Boxee will become a legitimate option for content providers who want to charge for their programming. Avner Ronen, Boxee's CEO and co-founder told me more about the plan yesterday.
Avner likened Boxee's approach to Apple's App Store, in that content providers will be able to set their own pricing and business model (e.g. rental, subscription, etc.). Boxee will work with a payment partner (not yet disclosed) which will provide the platform itself, with Boxee developing a 1-click UI for consumers as well as a content partner console. Avner said Boxee hasn't decided on the transaction percentage it aims to charge, but did say it will be less than the 30% or so that others like iTunes and Amazon ordinarily keep.
Boxee has attracted a strong early adopter following and has unveiled plans to launch its first convergence device, the Boxee Box, with partner D-Link. The move to support paid video is significant because as Boxee reaches into more mainstream homes, it could be yet another meaningful "over-the-top" alternative for consumers to pay for just the content they want, further pressuring the traditional multichannel subscription model. Microsoft's Xbox Live Marketplace with the Xbox 360 is probably the closest comparable set up, although it supports downloading, whereas Boxee is focused solely on streaming.
While digital delivery offers new convenience, an issue for both streaming and downloading is limited portability. Avner said that one way Boxee intends to address this is to offer authentication options to third-party web sites, so that if a user has rented an episode of "Mad Men" for example, through Boxee, they would subsequently be able to go to AMC's web site and watch it again without paying for it a second time. This is somewhat similar to what TV Everywhere providers are also thinking about doing in their second phase, extending user authentication to content providers' sites themselves.
From Avner's perspective, Boxee's ability to support multiple business models, in a content partner and user-friendly approach, is key to success. It is still very early days for over-the-top delivery, and with TV Everywhere now rolling out, incumbent video service providers are fighting hard to maintain their positions.
Still, news this week that Disney is negotiating with Microsoft to extend some of ESPN's programming to Xbox is a potent reminder that premium video providers are exploring (albeit gingerly) all their options for getting into the living room. If Boxee's new box becomes widely adopted, it could become an important player in the unfolding over-the-top drama.
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