The Roku Digital Video Player has just gotten a whole lot more interesting.
The company announced Tuesday that it is adding more than 40,000 movies and TV shows to its online video service from Amazon Video on Demand.
Roku launched its $99 digital video player in May with Netflix as its first streaming partner. For a monthly fee, consumers can watch any of Netflix's 12,000 movies and TV shows in its library.
The company said it had sold out of the device in the first two weeks after it went on sale. And since then, sales have been strong, said Tim Twerdahl, vice president of consumer products for Roku.
The company won't release specific sales figures, but Twerdahl said the company has sold well over 100,000 devices in the past nine months.
While this is certainly a good start, the Roku box could become even more popular as more content is added to the platform. The Netflix deal has been a good start, but the service only offers a fraction of its overall DVD library for streaming.
The deal with Amazon is key because it not only offers a much larger library of content, but it also offers hot new titles, many of which are released on Amazon's download service when they're made available on DVD.
Amazon's service also offers a different business model. Instead, of a subscription service, the Amazon service will allow users to rent movies on demand for about $2.99 to $3.99 a movie. Here's how it works. The Roku player connects directly to any TV and uses a broadband Internet connection to deliver streamed DVD-quality video to the TV. The device also has a Wi-Fi connection, which can simplify the set-up and provide Internet connectivity even a room where there's not an Internet hook-up.
Users can browse Amazon's Video on Demand menu right form the TV, or they can watch movies or TV shows that have already been downloaded from the service to their computers. Current Roku customers will receive a free and automatic update so they can access the Amazon Video on Demand service.Twerdahl says the Netflix and Amazon deals are just the beginning for Roku. Ultimately, he said Roku hopes to provide consumers with a replacement for cable service.
"Our mission is to help you cut your cable cord," he said. "We want you to be able to watch anything from the Internet on your TV. And we are working with content providers and we'll be releasing an SDK soon to allow content owners to create their own channels."
Specifically, Twerdahl said Roku is talking to the big TV networks, such as ABC, NBC, CBS, and Fox, to bring current TV programs and live TV events via the Internet. He said this programming would likely be supported by advertising.
In addition to TV, Roku also plans to add access to other services, like Internet radio or online picture sharing. This would allow people to listen to music services, such as Pandora, through their TV or view photos from services like Flikr or Snapfish.
The key to Roku's long-term success will be in its ability to score deals with all the major content publishers and distributors. Once it's able to do that, it could become a legitimate replacement for cable TV services.
But Roku still has a long road ahead of it. For one, it's not the only company going after this market. Both Apple and Microsoft have their eye on it; Apple with its AppleTV platform and Microsoft with the Xbox. And the cable companies themselves are also talking about offering some video content via broadband.
So far, Roku appears to be on a good path. For one, it has priced its product at $99, much cheaper than either Apple and Microsoft. Second, it is using a mix of business models to appeal to different consumers. The Netflix service is a subscription service. The Amazon deal is rent-on-demand. And future content offered by TV networks and through niche channels will likely to be advertising supported. A mixture of business models, along with access to a wide range of content, could make Roku a strong player in the video broadband market.
Roku is also working directly with content owners and distributors, which means it is avoiding some of the troubles that other online video companies are facing. For example, Boxee, which provides a free, one-stop user interface for watching video from a variety of sources, never had explicit deals with some content distributors or owners, and it recently got burned. Last month, Hulu.com, removed itself from Boxee's media center platform. Apple TV has also prevented its service from running on its box.