Netflix and Roku hope to avoid the curse of the set-top box

What makes Netflix's new living-room box for Internet video downloads different from all the other set-top flops? Everything. The price is low: At $99, it's much cheaper than the $229 Apple TV. It connects to regular TVs as well as HDTVs, and can stream video in variable quality depending on your Internet connection speed. And you can eat all you want from the buffet of available titles on Netflix, with movies available online that happen to be in your Netflix queue already lined up and ready to go. Hardware partner Roku has introduced it with a chipset that other manufacturers can license, and Netflix has a huge domestic subscriber base as potential customers. So what three things could doom this product to the same fate as every other Internet-video set-top?

  • Internet service providers: Comcast is a cable provider and AT&T has its U-Verse and HomeZone IPTV offerings, and both companies have their own set-top boxes and on-demand movie and television offerings. Plus the two generally compete only against each other in many markets. Which means neither has much of an incentive to increase speeds to those that could provide the Roku box with the HDTV signal it reportedly supports. Comcast has shown that it will throttle bandwidth for specific applications, and then lie about it to the FCC.
  • Movie studios: I've used the Netflix feature to watch movies online and the selection isn't particularly impressive. Reports peg available titles at 10,000, with a handful of television shows thrown in. Netflix will have to go over the heads of the DVD distributors it has relationships with directly to the studios if it wants current content.
  • Surly adopters: Fool me once with Akimbo, the Apple TV, or Unbox over TiVo, shame on you. Fool me twice with the Roku? Shame on you. The gadgetophile market is probably wary of cluttering their home theaters with yet another clunker. The key will be to get the chipset Roku has developed for the box built into new TVs. Only then can Netflix count on the kind of mainstream audience that will convince the studios and the ISPs that the project can't be ignored.
So while various gadgeteers remark how inexpensive and easy to use the new product is , remember that more than a few movies-over-the-Net pioneers have gotten arrows in their back trying to explore the living-room frontier.