I feel very strongly that, at this point, a one-trick pony is doomed in this market – unless it is very, very inexpensive. Even then consumers have ‘box fatigue’ and are tired of putting Yet Another Box in their entertainment center and finding a place to connect it. Convergence is where it is today – which is why Unbox on TiVo was a great idea – and Netflix on TiVo would be too. This is also why Apple TV has been lackluster at best, and Akimbo and Moviebeam pulled out of the hardware market completely – and why I believe VUDU will fail as well.

We have VOD available through pretty much ever cable and satellite operator now. TiVo has Unbox. Xbox has video downloads – including HD. Sony just announced they’ll be bringing downloads to the PS3. Modern hardware is so powerful that it can perform many functions, and do them all well. There just isn’t a place for a horde of single-purpose boxes today. The comments on the ZNF post seem to agree with my viewpoint as well.

Netflix should partner with someone – or multiple someones – who already have STBs in the market. TiVo has said their partnership with Amazon isn’t exclusive – so they’re a possibility. Microsoft would likely welcome more content in XBox Live for 360 downloads. Netflix could do downloads, or streaming, to a PC and support viewing over a Media Center Extender. Or work with the MCE companies to stream right to the MCE over broadband.

Stop reinventing the wheel. Unless your system requires specialized hardware (like a Slingbox), we don’t need a new box. Something like the SlingCatcher I understand, it is a client for another hardware device and isn’t a one-trick pony.

The answer appears to be by jumping in feet first – via the acquisition of established player Movielink.

Backed by Universal, Paramount, Sony Pictures, MGM and Warner Bros., Movielink has a large library of available films. The main limitation for Movielink is that download playback is limited to Windows PCs and to watch on a TV you need to connect the PC to the TV directly, or use a Media Center Extender. It will be interesting to see what steps Blockbuster takes to close the gap in getting content on the TV. Amazon Unbox, of course, has TiVo to get content on the TV. The TiVo/Unbox relationship is non-exclusive, so it is possible Blockbuster could also do a deal with TiVo. Hopefully they won’t try to launch yet another STB.

“We have nearly a dozen active agreements in place for digital delivery of our content with such major players as Apple, Amazon, Microsoft, Blockbuster, Best Buy, and Wal-Mart, with more to follow.

All of those companies have active download services – except Blockbuster and Best Buy.

There is another issue – Apple, Amazon, and Microsoft all have ways to display their downloads on a TV. Apple has Apple TV, Amazon has Unbox on TiVo, and Microsoft has the Xbox 360. Wal-Mart currently lacks a solution for watching anywhere but on a computer, and adoption of their service has been slow.

Would Blockbuster and/or Best Buy have a hardware solution to display on TV as well? Or would they be yet another computer-only solution like Wal-Mart, NetFlix, MovieLink, etc? If they have a solution – would they produce their own, branded box? Or partner with someone?

There are potential partners out there. TiVo’s partnership with Amazon is not exclusive, other vendors could partner with TiVo as an additional content source. Perhaps the Sony PS3 or the Nintendo Wii. Sling Media has the SlingCatcher coming, with as-of-yet unannounced content partnerships promised. Personally, I believe a solution for displaying the content on a TV is critical for the success of video download services. And partnering with existing hardware providers is a much better path than producing Yet Another Box to try to sell to people. That business model hasn’t been very successful to date – see Akimbo, Moviebeam, et al.

Since NetFlix has rolled out their online service it is all but inevitable that Blockbuster would do the same. Blockbuster prevaricated a bit:

A Blockbuster spokesperson declined to comment on Feltheimer’s statement. “We intend to offer a movie download service, but we have not provided any details on timing or anything else,” spokesperson Randy Hargrove told Ars Technica. “It makes sense for us to participate in the download space, but we don’t see it becoming a huge business in the next year or two. That said, it’s something we think is important.”

I picked this up from PVRWire @ TV Squad.

Akimbo is changing their approach. The hardware angle has never caught on. Instead, they now offer Akimbo as a service for Windows XP and Vista, via a software client. They’re also pursuing licensing of their service to other STB makers – and it is currently available on the AT&T Homezone unit. While I’d love to see Akimbo content offered on TiVo, I won’t hold my breath. Akimbo has always used the WMV9/VC-1 codec – and only the Series3 has a decoder for that format. (Yet to be enabled in software.) Akimbo would have to do as Amazon has done with Unbox – produce a special MPEG-2 encoded version of the content for Series2 TiVos. Possible, but I don’t know how likely I’d consider it.

Either way, I don’t think this is a good omen for Vudu, no matter how clever their technology is and how many licenses they have.

(I picked this up via ZatzNotFunny.)

VUDU looks to be primarily a competitor with AppleTV. It is a small box, described as being about the size of a hardcover book, that connects to your TV and home network and allows you to download video. It seems similar to past dedicated appliances such as Akimbo and MovieBeam. Both of those services bombed in the market. Akimbo has refocused more on service than the device, offering their content via Windows Media Center PCs now. MovieBeam is effectively dead, it remains to be seen if they re-launch.

So, what sets VUDU apart? The hardware is more advanced. They’re using MPEG-4, and the box has HD output. The box has HDMI, component, S-Video, and composite output. Audio has optical digital out, coax digital out, and RCA stereo. There is an Ethernet port for the network connection (but no built-in WiFi). A USB port, what appears to be a coax jack (but I can’t read the label), and, interestingly, an ‘IR Out’ jack – not sure what that would be used for. The remote control is funky – just five buttons and a scroll-wheel. Other details, such as the size of the hard drive, have not been revealed. The final price hasn’t been announced, but it is currently set at around $300 – the same price as AppleTV.

VUDU works a bit differently from the other devices as well, similar to the Joost software currently in beta – it utilizes P2P. Instead of all downloads coming from one central server, VUDU units use a BitTorrent style P2P network so that other VUDU boxes that already have the content will send parts of the file to the requesting unit. This will greatly reduce download times, just as BitTorrent does. Additionally, VUDU will use a predictive system, in a way similar to TiVo Suggestions. Based on predictions of which content is most likely to be rented, VUDU will download the start of the video file in advance. This allows the user to start playback immediately, while the unit continues to download the rest of the file in the background. That’s pretty clever.

But, more than the hardware, VUDU seems to have managed to do something no one else has yet been able to do, including Apple – they’ve already negotiated content deals with every major studio – except Sony Pictures Entertainment, as well as several independent studios. From their site:

VUDU has struck unprecedented deals with seven major studios and numerous independent and international distributors to offer thousands of titles, from mainstream new releases to smaller, more specialized films. Via their broadband Internet connection, VUDU users will have the ability, on a studio-specific basis, to rent or buy movies and begin viewing them instantly.

According to the New York Times articles, VUDU already has over 5,000 titles licensed – before they even launch, from the seven major studios and 15 smaller studios. That’s 10 times the 500 films Apple offers from just two major studios.

VUDU’s is headed by people with a lot of experience – two of them are ex-TiVo employees. Edward Lichty, VUDU’s Chief Operating Officer, spent eight years at TiVo. VUDU’s Vice President of Engineering, Andy Goodman, was the second hire on TiVo’s software team. There is even more from the Times article:

By mid-2005, after raising $21 million from two Valley venture capital firms, Greylock Partners and Benchmark Capital, Vudu was ready to begin designing the box itself. Mr. Rossmann said he advised Mr. Miranz to “get some DNA from the company with the closest experience to what we are going through: TiVo.”TiVo’s set-top boxes have snared a passionate audience over the last decade by offering time-saving utility with a simple user interface. Vudu hired 11 TiVo veterans to help steer product design and manufacture its box.

Since VUDU is a 41 person company, as per the Times article, more than a quarter of the company is ex-TiVo.

VUDU emphasizes the video purchasing, and it isn’t clear if the device will act like a media center extender and allow access of any local media. I would hope that it would, it appears to have all of the bits to do so and it would make the box a lot more useful if it did more than just download video from the net. Being able to access local music, photos, and video would make the device much more useful.

In any case, it would be yet another box to have under the TV – and it is getting a little bit ridiculous. I’m a gadget geek, and I have two TiVos, a DVD/LD player, VCR, A/V receiver, and Slingbox Pro under my TV – and an Ethernet switch to handle the devices. TiVo already handles local media – music and photos, and transcoded video. Amazon Unbox gives it movie downloads – the main thing lacking right now is HD content for the Series3, but this is supposed to be coming. Even with the content deals, are consumers willing to pay another $300 for another box that just allows them to pay for downloadable content? Even as a gadget geek, I’m not sure I would be willing to – especially if HD content comes to TiVo Unbox. Microsoft already has downloads on the Xbox 360, including HD content. And Sony will be bringing downloads to the PS3 – which is probably why they’re not dealing with VUDU.

It seems they’ve thought about that too:

Vudu executives even consider the possibility that their hardware box might eventually melt away, with its services running as the video-on-demand feature in a satellite box, video game console or a new breed of high-definition televisions.

Personally, with all the TiVo connections, my dream would be to see this service land on the Series3. (I doubt it would appear on the Series2, since they don’t do MPEG4.) It could also land on devices like the SlingCatcher. I would like to see more convergence, fewer boxes.

And that’s all it does – playback downloaded content. The thing is designed to be a networked box and it can’t access any *local* content – no HMO style features. You’d think that a box designed to playback downloaded WMV files would let you at least play WMV/WMA files from the local network. And if you have multiple boxes in the home and download content to one – you can’t share it. So basically you get a one trick pony when for $100 more you can get an 80GB TiVo which lets you record anything you receive, use the HMO features and this fall will let you move content to a PC – and soon is supposed to let you do the same thing as Akimbo, download content.

Akimbo seems like it could be an interesting software package, something to license to DVR makers – but the HW seems to be too limited in a market where DVRs are exploding, and they have a long way to catch up to the features available now.