Today, Boxee is the darling start-up that is leading the defection of cable customers who are ‘cutting the cord’ and shifting to web video content. But if you want to see Boxee and the other content alternatives survive and thrive then we’re going to need to talk about business models sooner rather than later.
I’ve gotten ahead of myself. First some history.
Back when Jim Barton and Mike Ramsay brought the first working prototype of TiVo to CES, the year was in 1999. Either just 10 years ago, or a long 10 years ago depending on your point of view. The minute TiVo arrived on the scene, the folks at the TV networks knew the gig was up. Why? Because TV’s entire value proposition was based on interrupting TV shows with ads, and making people wait through them to get back to the programming. TiVo changed that forever.
Early TiVo users were passionate evangelists, driven to see TiVo turn the TV world upside down. But a bunch of stuff went wrong back then. Boxee — take note, because the similarities are eerily familiar.
First, TiVo had a totally weird business model that seemed to be built on gaffers tape and chicken wire. They sold the boxes at a deep discount, and then ‘rented’ the listing service on a monthly basis. The only problem was, the wanted the cash up front, so they sold “lifetime” subscriptions. The catch was, the “lifetime” was the life of the box, not the life of the consumer. So, when the Series 1 made way for the Series 2, well, your lifetime subscription went down the drain. Also, by the way, TiVo’s new boxes got less and less love as the prices went up and weary consumers who’d bought more than a few ‘Lifetime’ subscriptions went looking to Sling Box or Apple TV or various homebrew solutions.
Then, Tivo simply lost its way.
The reasons are varied and complex. But there’s no doubt that TiVo did a deal with the ‘devil’, taking a sizable investment from NBC early on. So, the fox was in the hen house, and the service that TiVo was going to disintermediate now had a seat on the company’s Board of Directors. And not long after that NBC’s Board Member Tom Rogers was the CEO of TiVo and Ramsey was out. Bet you didn’t know that.
So, now TiVo is focused less on changing the ad business and more on replacing the set-top box. A few patent infringement cases later, TiVo is positioned to be THE software for DVR functionality at Comcast and a number of major cable companies.
The point of this history lesson? Companies that threaten the status quo often find themselves bought by the leaders of the industries they most threaten — and then, somehow, they lose their way.
So, to Boxee.
I want to see programming become an open marketplace. I want to be able to buy A&E as a network feed for $X, or a show from A&E for $Y, or a season pass for another fee. I want to be able to watch first-run films, back catalogue features, edgy documentaries, and films just out of Sundance or Tribeca distributed by indie filmmakers or direct-to-home studios. I want choice. And I’m willing to pay for it.
Cable has long called this free market system “a la carte” and threatened that many of the cable networks we now know and love would not have been created without cable being able to sell you “Tiers” of programming. Ok, maybe. But that was then and this is now. And I want to be able to pay for shows from Revision 3 or Blip.TV with some of the cash that I’m forking over to Time Warner Cable right now.
So Boxee could — and should — be the broadband software that makes this possible. They could be the new operating system for the open content web. That’s a business plan. And Avner and his investors know it. (At the same time, an exit is an exit, and VCs can’t help but notice if someone with a big checkbook comes in and offers up a 10X multiple to sell Boxee to NBC or Comcast or another incumbent with a bunch of cash and a vested interest in slowing the development of open sourced content to the living room.)
Boxee, don’t do it!
Instead, here’s what you should do.
1. Get from Alpha to Beta fast. The software is still too buggy and slow, and crashes my Apple TV far too often. Charge me a monthly or yearly subscription fee and make the software fixes and upgrades automatic rather than requiring me to spend half a Saturday every three months trying to make my living room media centre work.
2. Start selling stuff. Sell subscriptions to Blip.TV series. Sell movies. Sell live events. Get folks in the habit of paying Boxee. There’s a ton of disposable media money looking for a home. Amazon wants it. Netflix wants it. The sports guys want it. But consumers don’t want to have to pay multiple vendors with multiple accounts. Be the gatekeeper, and then allow anyone who wants to sell through your gateway a place at the table. Abundance is the new exclusivity.
3. Focus on improving the community recommendation elements. As the world gets noisier, Boxee could well be the way that I could find new movies to watch, new TV shows to sample, new Tech videos to browse. But much as TiVo abandoned their AI recommendation engine four years ago, Boxee’s peer recommendation piece seems to be falling behind.
4. Sell hardware. Get a cheap drive solution and add Boxee built in. Or licence it and get it in the market fast. Right now the choices are Microsoft Media centre (ick), Apple TV (ick as well), or Mac Mini ($600!). There’s a $199 solution waiting to be born that is consumer friendly and would sell like crazy.
We’re in the window to change the way TV is delivered to the living-room flatscreen. Boxee could win the prize — and it’s a big one. Don’t sell to the past. Instead, be the future. It’s there for the taking.
Steve Rosenbaum is founder and CEO of Magnify.net, a NYC-based Web video startup. He has been building and growing consumer-content businesses since 1992. He was the creator and Executive Producer of MTV UNfiltered, a series that was the first commercial application of user-generated video in commercial TV.
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