Why the Netflix Roku Will Fail
Netflix and Roku today announced the $100 Netflix Roku. What's a Netflix Roku? It's a $100 box that will let you watch Netflix "Watch Now" movies on demand with yet another new box to clutter up your living room. CNET has a review here. They say they've had a box and have been testing it for two weeks. Interestingly, it looks like Mike K, who runs the top Netflix blog on the internet Hacking Netflix, hasn't had one for the past two weeks. Interesting how everyone is always saying that "Netflix gets blogging."
So why is this a bad move? Easy. Because nobody will buy the box. Well not nobody. They'll sell a couple of them I suppose, but this thing will never really get off the ground in a big way. We've seen this movie before, it was called Akimbo. Remember the Akimbo box that was going to revolutionize how we watched TV? So why will the Netflix Roku box fail? Simple.
1. People don't want more boxes in their living room they want less. A satellite receiver or cable box, an XBox 360, a home theater sound system, a TiVo, an AppleTV, a DVD player, etc. etc. The last thing people want is one more ugly box cluttering up their living room.
2. The content on the box is not very compelling. Do I want Netflix "Watch Now" in my living room? Sure. Would I pay $100 to buy a box that streams me old episodes of Columbo or Xena Warrior Princess Season 1? No.
Can I get Juno on the Roku? No. Can I get Michael Clayton, or There Will Be Blood or American Gangster on the Roku? Nope.
Now some people will say that the hot new releases will be on this box, that it's only a matter of time, etc. etc. but I think until we see that, the box is premature.
The funny thing is that there is already a better way to get Netflix "Watch Now" into your living room without having to pay $100 to buy yet another box. It's called the XBox 360. You can already (theoretically) stream Netflix's "Watch Now" service directly to your XBox 360 with your Media Center PC (that is up in your attic or over in your home office by the way and connected via your home network -- not in your living room). I've been trying to get this to work a few weeks myself now but I've been hampered by the dreaded Netflix/Microsoft "good for the consumer" DRM issues.
So why is Netflix screwing around with Roku, when they could be working on and developing a better solution with the XBox 360? My guess is that it's simply shortsightedness. Roku is probably offering them something like $20 per box and Microsoft likely won't pay them anything. The problem is that $20 per box doesn't amount to a hill of beans if you don't sell any boxes.
The better solution is to better improve the XBox 360 version of "Watch Now" and then let Microsoft's marketing department push this new "one more reason why people ought to buy an XBox 360" (that also is a DVD player, a game player, your extender which gets all of your TV, photos and music to your living room, oh yeah and now plays Netflix content -- think less boxes not more)
Of course if Netflix pushes this idea then nobody will buy the $100 (and their $20 cut) Roku box.
Of course another way to spin this story is simply that the Roku is the best thing since sliced bread and is the "$100 Apple TV Killer" like they did over at CNET's News "Blog" which got to break yet another story. Good thing Netflix gets blogging!
posted by Thomas Hawk at 6:08 AM
36 Comments:
Netflix is licensing their streaming tech to a variety of partners. Roku is just the first and possibly the only to offer a *dedicated* box. I assure you that Vista Media Center will be getting an official Netflix plugin at some point, though the unofficial ones are looking good. Not to mention Netflix just hired one of those developers.
Regarding Roku, the founder/CEO founded ReplayTV and was hired to run Netflix's Internet TV business. Then he left and went back to Roku. So that explains that relationship. One one report says several Netflix employees landed at Roku along with a 6 million dollar investment.
I'm not so sure this STB is a one trick pony. Are you sure Netflix is getting money for each box? I'm not. Do you see any Netflix branding on the box? I don't. I wonder if this STB will be able to go to YouTube, Hulu, etc. eventually. If that happens, this was a brilliant marketing strategy on their part. Look at all the noise this announcement is making.
I think one of the main drawbacks of the box is that you have to add movies to it by a PC or other device. The box can only play movies in your queue.
I agree that the Xbox is the better way to go. Even with the unofficial support, you can just do so much more with it. What the Xbox lacks though is Netflix support for anybody who doesn't own the media center program. Since most of the computers out there are running XP, this gives consumers one more option to get Netflix without having to upgrade their computer to a more expensive set up. It won't appeal to everyone, but it will appeal to a lot of baby boomers who like the idea of being able to use Netflix on their TV, but who haven't spent the time to figure out how to connect their television to their home networks. It's fair to compare this to Akimbo, but there are also a lot of differences $100 is a much more reasonable price target and Netflix already has an established customer base. You'll also notice that the Roku box doesn't have a hard drive which added a lot to the Akimbo expense. This should allow Roku to actually make a profit on the box instead of having to rely on VC cash to stay afloat. My only complaint is that Roku didn't make the box more robust. It would have been cool if they also incorporated Music streaming, photo slide shows and DivX support. I don't know whether they can add any of this later on, but it would give them a huge advantage over similar media bridge products on the market.
As long as they continue to Stream TV shows, I am happy. I have only 2 boxes. AN Xbox and comcast box. One more little one will not be a problem. That being said, I do think I will wait alittle while to see what else will be released.
And for those of us who neither have, nor want an XBox 360? (I love my Wii, thanks).
I think the Roku is probably a good deal for people who want something that'll just work with Netflix's streaming service, who see the Xbox 360 for what it is, a game console.
Here's the real reason it'll fail, the same reason the 360 won't go anywhere - it's yet another closed device that ties into a closed ecosystem that's useless for any other purpose. Yawn.
Everyone wants to be the next iTunes/iPod - and seems to miss the point that the latter was only successful because it did fit in with the broader ecosystem of digital music; including pirated tracks and ripped CDs.
When someone actually makes a user friendly, general purpose digital media player - that can accept files (or streams) from any number of sources due to its open nature, that will be a success. Till then, they're just pissing away money on devices that'll never find broad acceptance in the market.
And for those of us who neither have, nor want an XBox 360? (I love my Wii, thanks).
Then Eric, it should work on your Wii. My point is that rather then partnering to make yet another stand alone box with yet another remote control, Netflix should be working to get "Watch Now" on existing devices that consumers are already using. XBox 360, Wii, TiVo, AppleTV, your cable or satellite box (although they will fight something like this tooth and nail because it takes money from them by offering competing content).
Dave Zatz is right. Look for "Watch Now" on other platforms in the future. Then no one will want to pay $100 for a standalone box when they can get it on their existing box without paying $100.
I've got Vista Media Center and Watch Now functionality set up on my 360. Yeah, it works. But it's still somewhat hokey (And that is NOT a criticism of the program or developer) and obviously unsupported by Netflix. When official support for the 360 shows up, I'm totally there. But in the meantime, I'm fine with dropping $100 on a device that gets me the content in a supported fashion and shows Netflix in the best way possible (my wallet) that I support where they're heading, even if I only use it for 6 months or a year.
The "only older content" argument is somewhat specious, and specific to your tastes. I'm fine with getting older content on the box, and new content in the mail. The services complement each other quite nicely.
The other factor is ease of use. Sure, you have to set up your queue on a PC in advance, but from what I've seen of the box, actually getting a movie up and running from a powered-down state is a lot easier than on the 360. That's worth something as well.
We'll see if my opinion changes when mine shows up. (So there you go Thomas, you know at least one person has bought one! :) )
Netflix did just hire Anthony Parks the developer of one of the Media Center Netflix apps
more info
I would think that for a $100 they would/could make it work, but if they dont execute it correctly they are bound to fail.
Common Netflix dont fail now.
I don't have NetFlix (anymore), but the idea of paying anything for a piece of hardware to access a service is distasteful.
I occasionally use Amazon's Unbox because it just showed up on my TiVo for no incremental cost.
Though most of the time I download stuff from the 'net, transcode it using VisualHub and place it in the TiVo Desktop's shared video folder so I can watch it from the TiVo.
Your XBox 360 scenario is the same. You should be able to get it at no incremental cost.
Marketing people really need to wake up to the "open" concept and start "enabling" rather than "building" anew.
Well, I lose. Because my shipping address didn't match my billing address, the order was declined and they're already sold out so I can't get one anytime soon. Since I can't get it this week, I don't see any point in ordering one anymore. At least I have the media center/360 plugin working...
Nicely said. Until there's a box that lets me view my choice of internet sites, plus everything on my PC, I ain't buying.
I've written recently that nobody wants a one-channel TV.
When will these guys understand that "exclusive content" makes their boxes more and more sticky with a smaller and smaller slice of the market?
I've read a few reviews, and I'm trying to figure out if what you guys are saying is that Netflix and Roku are misleading us..
Netflix has said they have multiple partners they are working with to get Watch It now supported. This includes LG building it into TVs and Bluray players. They said there are others. Don't we believe them?
As far as the box being closed, I haven't read anything that says the box can't support other services. Roku has said there aren't any licensing restrictions that prevent them from supporting other services. So, the hardware seems to be flexible, if you believe them.
What I'm trying to figure out is of the 8+ million netflix users, how many of them have a stack of boxes already. I'm assuming some of them don't have any premium services and get their movie fix by renting, that some actually have their DVRs built into their Satellite or Cable box.
Setting up your PC to serve content is all well and good, but you have to understand, that's not most people. Most users aren't ripping DVDs to media servers. It's more the exception than the norm.
And, the content isn't so bad. I can watch Weeds, Heroes (both seasons), Friday Night Lights, etc. They have more current shows, and yes, older movies. But, it seems to me, there's always older content coming out on DVDs for customers to buy.
I've been waiting for this for a long time. I think this will be big.
I think assuming the XBox route is better is a bit parochial. Lots of people don't have or want an Xbox. I don't. (I have a Wii) I wouldn't buy an Xbox just to play video, especially if I also need to set up Windows Media Center. That is not easy or fun - and I work with computers 24x7. I don't really want to dedicate a computer to this task. A cheap single dedicated box that does the trick is what I want.
Having "another box" is not a big deal for the kind of people who'd want this. Multi function remotes and powerful receivers let you plug in and control lots of devices without thinking about it. You won't even have to SEE this device, or many others - an infrared repeater would let you put it far out of the way.
But someday I am sure we're going to see netflix (and competitor's) players integrated directly into stereo receivers or TVs. But
If the failure of anything should be discussed, I think it should be Apple TV. This is going to blow away the Apple TV as an on-demand video player. The iTunes store video library is just too small and too expensive. Apple would need to come out with a competive subscription price like Netflix, and expand their library dramatically.
Another failure - or maybe a better description would be a shift - will be the replacement of DVDs with online delivery. Eventually Netflix will be able to have their entire library online. And on that day I can throw away my DVD player, ask them to stop mailing me whats in my queue, and watch everything on demand.
Anyway, just a few of my thoughts.
I think it's great idea, so I just ordered my Netflix player. Within a year it'll have HD content and a huge catalog to choose from. As a current Netflix customer there's no additional service fee to use the player box. The Player is simple to set up and use, so I think tens of thousands of these will be in use within a few months, IMO.
Can I get Juno on the Roku? No. Can I get Michael Clayton, or There Will Be Blood or American Gangster on the Roku? Nope.
It will be a long time before new release content comes to a Netflix VOD service. The studios do not want to cannibalize their current VOD services. They want you to pay to rent new release content. The best you can hope for is a box that will support Netflix and other services. I think that box is coming.
Yeah, I guess you are right that they will only sell a couple of Roku Boxes. Since they have already sold out of their first shipment, Roku must have just brought in 1 carton with 2 Roku boxes in it...
Hmmm, the tone of the argument is so arrogant. The Roku box is an excellent alternative for those of us who don't have an xbox and are more interested in "long tail" content than new releases. The price is right for those of us who simply want to add value to our Netflix subscription. It's not a stand-alone service, but an add-on.
I predict this box will actually do well. To echo you: Why? Simple. Small, inexpensive, easy.
I hear they already have a back-log of orders.
Why is everyone assuming that all netflix subscribers who may want to watch something on their television have a XBox 360? It seems logical to me that a one time $100 purchase is a reasonable option for someone who wants the added luxury and does'nt own a $350 XBox
I think you're totally wrong. For one thing, from what I have been reading they are backlogged on orders. But that aside, I don't think either of your arguments are very strong. 1. People don't make decisions based on whether they've got too many boxes already. If it's a good product, they'll find the space. And it doesn't make sense that your solution to this is what? Buy an XBOX? Isn't that another box? It's more expensive and not everyone plays video games. Might work, like you say, for those that already have a gaming system, but why wait who knows how long until all that is sorted out when you can bring a product to market now? Besides even if/when "watch it now" plays on gaming systems, there will always be a market for cheaper, smaller device. 2. The content actually isn't that bad. Everyone I know has at least 30-40 movies/series on their watch now queues (I have 80) which is enough to last at many months, which by then more content will be added. Obviously online viewing won't show new releases anytime soon, and people know and accept that. Besides, if the "limited" content hasn't deterred people from viewing on their PCs, then what makes you think it will deter them from watching on their TVs? In any case, the biggest reason the Roku player will succeed is the price. $100 barely gets most people 2 full tanks of these days. There won't be much hesitation there.
What the critics don't get is that the Roku Netflix player is a device with a ready-made target audience - Neflix fans who have already identified the content they want to stream to their television. I have had a media extender for over a year - to stream music mostly - but I jumped at the Netflix player because I am a Netflix devotee. It won't be an IPOD type explosion, but they will (have) sold quite a few to the Neflix base.
I'm caught in the backorder but my friend got one so I know they exist.
I agree with the long tail argument. If this means Netflix can host a copy of some documentry instead of shipping it from across country because it isn't popular enough for my local service center to have it I am all for it. I suspect more of their older titles 4+ years old will find themselves offered on watch instantly only. Why? because dvds are physical objects and over time all of them will be destroyed/lost/stolen. I'm sure most regular netflix users have discs that are in "Saved" purgatory. I see it as Netflix expanding the amount of time they rent my time by offering something to do while discs are in the mail. The more time I spend with them the less likely I am to cancel the service. Been down with netflix for 6 years but I'm probably one of their cash cows since I average less than 5 discs a month :)
The problem with the "download only" argument is that movies in download form are separate objects, legally, from the same movie on DVD. They require renegotiation of all royalties and other rights with directors, producers, actors, etc.
This is the reason why so much of the back catalog has NOT been made available to date, particularly given renewed interest by actors/directors in increasing the royalties they receive from online fare.
Prolly won't fail affore I die. So, What's the cheapest I can get this from Netflix? I mean the cheapest Netflix subscription? How about 1 video out at a time? My wifey will just love watching all the old stuff. Me. . .I'd rather sleep, I gotta get up and go to work most days.
Thx
For $100 and the $9/month plan, this thing eliminates any need for cable TV. I think it's fantastic!
I refuse to pay $100/month for cable tv and just use NetFlix now, and for the past four years. Also, I hate watching ads. Since I already pay for NetFlix, I see this as getting instant movies for free. This was an easy decision.
So I ordered it and have been using the Roku for three days. I like it! The service is quite convenient. My internet connection is 3 Mbps, so the video quality is excellent. So far no complaints.
The instant watch movie selection is not huge, but there are plenty of choices on my viewing wish list.
The box is now backlogged 6-8 weeks. It hasn't failed yet.
http://www.hackingnetflix.com/2008/06/rokus-netflix-1.html
Your suggested alternative -- an xbox 360 -- illustrates how little technorati understand the living room. The Xbox 360 appeals to a narrow demographic with a lot of disposable income. Roku's box appeals to my Dad.
NetFlix wants to get out of the physical media distribution business. This represents their first attempt to put a device in their subscriber's hands that does just that. By getting the device out there, NetFlix can begin to work on better "watch it now options" and fine-tune the formula. The box itself can be upgraded to have new features. Netflix can offer tiers of watch it now service (new releases, premium content) or online rentals (aka Amazon Unboxed).
It's going to be quite successful because it fulfills the desire that most cable subcribers have had for "a la carte" programming. It is the anti-Tivo -- bypassing the dumb extra step of recording shows through this arcane technology called "broadcasting". It represents an evolutionary step.
I like that your playing devils advocate here and your taking the opposite road most are choosing. However,
i don't agree that no one will buy it as this guy right here will absolutely get one and yes i realize there's no HD, no new releases, no video game system built it. the thing is the people that are going to buy this are movie lovers! the 8 million or so subscribers who already adhere to the netflix mantra. These are the people that will enjoy this small miracle of movie watching spender. i am actually getting rid of one of my satellite receivers and dedicating a television solely to the Roku!
i hope you realalize that not only is the Roku an impulse buy for most people, but its tiny size and simple operation and even if only 1/4 of Netflix subscribers sign up that will still make it a hit!
good luck in the future with your xbox sir. i myself have no use for video games and or a jet engine living living underneath my television.
How do you explain that the box is constantly back ordered? I believe your assumption is incorrect.
I agree with the comments that this will not fail. My 78-year-old father just bought one, and loves it. (They're on the one-DVD-at-a-time plan with NetFlix). I'm very tempted myself--I'd rather watch Weeds on my 52" big screen then my laptop...and farting around with getting my laptop to display on my big screen just isn't worth it. At $100 and no extra fees, the box is small and fairly cheap...I think it will be successful.
Who cares if it doesn't have the newest releases the day they come out? You have to have a Netflix plan anyway so use that to get the new ones. I hate having to use the 2 DVD plan to watch an entire TV series.. Takes too long. This fixes it.
I own a 360 and still bought the box....... Basicaly an alternative to the vongo service I belong to now, which I will be canceling.
As far as the plugin goes, sure it works, then it don't..... So while you all fight with a buggy plugin, ill be watching movies without hassles.
Doesn't the PS3 have a web browser built in? Can't you simply log into your NetFlix account and click on "Watch Now" through your PS3's web browser?
People? I know economy is tight now, but $100 is a night out, seriously. not a fortune for a box that is ready to use in 5 minutes and gives you free unlimited entertainment. 10,000 movie + more coming, that should satisfy any family for a while.
And for the writer who spend 2 weeks trying to get his Media center to work free, isn't your time more better spent? I'd rather pay the $100 than waste even 1 hour of my time.
And if you guys are really cheap buy an extra long set of rgb cables and run directly from PC video card to back of tv, simple!
:)
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