Netflix Reveals STB Intentions

Dave Zatz —  January 3, 2008

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Netflix revealed their television set-top box ambitions yesterday. Hacking Netflix spoke directly with CEO Reed Hastings:

Our model is that we don’t want one Netflix-branded box, we want to see 100 Netflix-capable boxes. We want to be embedded in high-def DVD players, Internet games, dedicated set-top boxes, a wide range of options

Given much of the speculation leading up to this point, I’m somewhat surprised they’ve decided to create a Netflix service rather than their box. However, the strategy makes a lot of sense in limiting risk and maximizing exposure. After all, which companies (other than Apple) wouldn’t want Netflix on their Internet-connected television devices?

LG is up first, and has targeted Q2 2008 for delivery of a Netflix-enabled STB. No other details regarding functionality or pricing were made available at this time. No specific details on video streaming pricing were announced either, though the assumptions (Reuters, AP, NY Times) seem to be that the Netflix streaming service would inherit the current web-based model – either a specific number of viewing hours based on dollars spent monthly, or unlimited content.

As I said recently, given content licensing fees and Netflix’s low-cost subscriptions, I don’t see how unlimited streaming could be an economically viable business plan… Time will tell if they stick with it. And if they do, I’d expect some pre-roll advertising with movie content and commercials (à la Hulu) embedded within television shows.

12 responses to Netflix Reveals STB Intentions

  1. Wow! Cost wise as a user, I would rather they download to my Tivo.

    John Garrison

  2. I just joined Netflix last week and I am not impressed with the availability of popular titles. I assume this box would eliminate that annoyance. However, the last thing I want is yet another STB sitting out on my entertainment unit. I really, really wish they would partner with TiVo or that Unbox would offer HD movies. For me, there are too many content delivery options that aren’t quite there yet.

  3. robs67, I agree we’re in a period of transition. We’ll see what matures and what shakes out over the next 18 months.

    TiVo would be a natural fit if they didn’t already have Amazon Unbox. If Unbox encoded better and at higher resolutions, the service would be great. However, Netflix’s pricing structure for existing mail-order customers is quite compelling even if the viewing doesn’t turn out to be unlimited. I would love to have it on devices I already own, like TiVo, Xbox, etc.

    (Series2 TiVo units don’t natively support WMV which is why Unbox titles have to be re-encoded and why Netflix would probably never land on the S2s. S3/HD might be another story…)

  4. (Series2 TiVo units don’t natively support WMV which is why Unbox titles have to be re-encoded and why Netflix would probably never land on the S2s.)

    But is Amazon the only vendor that will support the Tivo S2 for movie downloads? Hope Rogers didn’t sell Tivo’s soul to cable and Amazon.

  5. But if DRM laden music streamed to dedicated hardware cannot make any money – what makes anyone think DRM laden movies streamed to dedicated ( and expensive ) hardware would be any different?

    Confused.

  6. I should add that I just got a PS3, so Netflix delivery to that device would be awesome as well.
    I agree about the Netflix pricing Dave. It allowed me to downgrade Comcast from “everything under the sun” to “HBO only.” Watching more for less is always good. But I also want a pony!!

  7. “After all, which companies (other than Apple) wouldn’t want Netflix on their Internet-connected television devices?”

    Cable operators who’d rather sell their own on-demand movies.

  8. Mari, I was referring to the retail options. :p However, you’re right and that’s where most of the competition is — they’ve already got the customers, the studio relationships/licensing, and the home connectivity. All the more reason for Netflix to continue experimenting with their alternate pricing scheme as a selling point. (Not so dissimilar from cable OnDemand services when you think about it…)

  9. i was thinking about reactivating my netflix account, maybe now is a good time…

  10. Not sure I’m really getting this. I’m concerned about incorporating support for something in transition like web video into an HDTV that costs thousands and that you don’t want to replace frequently. A device that I hook up to my TV, like a Tivo, seems like a much better fit. I suppose a BluRay player would be fine too, assuming I were ever going to buy one, and they were cheaper than they are now. Like others I think that supporting this on PS3 (unlikely, as Sony probably has their own ambitions, though they won’t fulfill them), XBox 360 (ditto?), and Tivo (conflict with Unbox) would be best. Perhaps the Sling Catcher is the best we can hope for…

  11. I think Netflix can beat the cable companies if they offer a wider range of movies. If Netflix only offers popular titles then there’s no compelling reason for most folks to stop using cable.

    BTW, this is exactly what’s wrong with Unbox on Tivo. I tried to find a couple kids movies for my family to watch on New Years Eve, and the selection was so horrible that we gave up and rented a couple discs from our local Redbox machine.

  12. Yeah, yet another box is what we need.

    Forget a set with built-in streaming. We’re going to need a set with a couple thousand inputs for all these boxes!