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Boxee Urges TV Nets to 'Experiment'

Boxee may not pose an immediate threat to cable operators with its Internet video product, but the firm says it wants major TV networks to experiment with selling programming directly to viewers through its platform.

Boxee still hasn’t lined up a single deal with a cable or broadcast network to deliver free, ad-supported content to viewers through its platform, which allows Web surfers to watch streaming online videos on a TV. But the firm revealed Wednesday that it’ll launch a payment platform this summer -- a move that could attract programmers that so far have resisted distributing content through Boxee without being compensated, as they are through Apple Inc. (Nasdaq: AAPL)'s iTunes Store or Amazon.com Inc. (Nasdaq: AMZN)’s video-on-demand service.

A key hurdle major cable programmers may need to overcome before pursuing over-the-top distribution is their standing MSO carriage agreements, which usually contain clauses that place limits on the amount of content they can distribute via the Web.

But as those carriage deals with Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and other operators come up for renewal, look for major programmers like NBC Universal and Fox Networks Group to push for more flexibility in their ability to sell content directly to consumers through platforms ranging from Boxee to gaming consoles such as the Microsoft Corp. (Nasdaq: MSFT) Xbox 360 and Sony Corp. (NYSE: SNE) PlayStation 3.

According to a report in The New York Times, ESPN is talking to Microsoft about selling live video streams from major sporting events directly to Xbox 360 users. Nintendo of America Inc. and Sony also allow owners of their gaming consoles to watch online video programming for a fee, and Apple is also reportedly talking to programmers such as CBS Corp. (NYSE: CBS) and Walt Disney Co. (NYSE: DIS) about distributing content to viewers through monthly subscription packages. (See Apple Video Play May Hurt Boxee, Roku and ESPN to Stream on Xbox.)

Boxee to programmers: Give us a shot
Boxee vice president of marketing Andrew Kippen says the company has talked to many content providers “big and small” about selling programming directly to viewers through Boxee’s over-the-top platform, but he declines to identify any that have expressed interest. Rather than positioning Boxee as a replacement to cable and satellite distribution, Kippen hopes major content suppliers would be willing to experiment with a new distribution outlet.

“What we’re saying to them is it’s an easy way to get Web content on the TV screen, and it’s a way for you to experiment. We’re open to any business model,” Kippen says, noting that Boxee could allow programmers to charge fees to Web surfers per episode, or allow networks to collect monthly subscription fees from consumers.

Existing carriage deals that networks have with major MSOs shouldn’t stop them from trying out Boxee’s payment platform, Kippen believes.

“I don’t see that being a great conflict for a cable provider. What we’re saying is, come experiment, and if something does take off, then certainly all of those cable deals will be renegotiated in the next couple of years, and obviously we’ll have to take a much deeper look at how online plays into that."

Boxee, which debuted in 2008, counts about 860,000 users, according to Kippen. Viewers that download its software, still in beta form, can watch streaming videos on a PC or through a TV connected to a computer. The company unveiled a “Boxee Box” last month at an event in Brooklyn, and it touted the product, which should make it easier for viewers to watch online video content on a TV, earlier this month at the Consumer Electronics Show in Las Vegas. (See Ronen: Boxee Isn't a Cable Killer, Roll Video: The Boxee Box Event , and D-Link Shows Boxee Box at CES.)

The Boxee Box, which will ship by the end of the second quarter and retail for less than $200, could help Boxee expand beyond its current user base of mostly tech-savvy Web surfers. It could also help the firm draw major content providers to the platform.

While Boxee appears to be gaining momentum from viewers who rely on the Web for video consumption, the firm faces increased competition in the over-the-top sector, both from startups like Roku Inc. as well as deep-pocketed giants like Apple and Microsoft. (See Roku 'Store' Opens With 10 Channels .)

But Kippen asserts that there’s room for multiple players in the sector. “I think there are going to be a lot of people going after this space in 2010. There doesn’t have to be one winner. If somebody proves out a model that works, the rest of us will adopt it, and it will be good for everybody. And consumers are getting more choice in what they are able to watch."

— Steve Donohue, Special to Cable Digital News

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