What's Next For Roku? More Video, Audio, New Hardware

netflix roku box

At $99, the Roku Internet video player — which streams movies and TV shows from Netflix (NFLX) and Amazon (AMZN) — is a nice deal. But it’s going to become an even better deal soon.

The company will be rolling out new features soon that add more video and audio sources. And we imagine Roku will also eventually begin shipping new hardware, perhaps by this holiday shopping season. Here’s what’s next:

Roku has distributed a software developers kit to media companies who want to add their offerings to Roku. This includes Blip.TV and Mediafly (both Web video/podcast companies) so far. We imagine all the big companies that do video on the Web — and, important, who want their video to appear on TV sets — will jump on, once it’s opened up, such as Revision3, Next New Networks, Boxee, YouTube, MLB Advanced Media, etc. Internet radio companies like Pandora and Last.fm, and photo sharing services like Flickr are fair game, too.

Roku will continue to announce new content partners. Blip.TV was announced recently, and will show up on set-top boxes this fall. We understand that Roku will be announcing a new partner next week. (We don’t know who it is.)

Roku will eventually ship new hardware. This isn’t confirmed by the company — an exec just rolled his eyes when we asked — but it makes sense. It’s tough making room in your living room for a device that only does one thing, like play video from the Web.

That’s one reason why Roku hasn’t sold as many units — hundreds of thousands, we think — as multi-purpose devices, such as Microsoft’s (MSFT) Xbox 360, which can play Web video and video games. Over 1 million Xbox users have downloaded and activated the Netflix streaming app, Netflix announced early this year.

We anticipate new Roku devices could include disc players — DVD or Blu-ray, to replace your existing disc player in your entertainment centre; hard drives to store content locally; or perhaps memory stick readers to play photos from your digital camera.

The big-picture question for all these products — like Roku, Apple TV, etc. — is whether they can capture enough users before cable companies — which already own a set-top box in your living room, and more importantly, own the pipe going into your house — can improve their own Internet video offerings. The safe bet is on cable, but they’re moving so slowly that “over-the-top” competitors like Roku have a shot.

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