Digital Media

Boxee, the open-source software platform that combines Internet media with personal content, announced a slew of updates Tuesday.

Most notably, the company announced that it has made Boxee publicly available to Windows users.

The public alpha version of Boxee for Windows will work with Windows XP, Windows Vista, and Windows 7. Users will also be able to run it on Windows Media Center, making it possible to bring Boxee to HDTVs through Microsoft's platform. A beta release of the software should be made available later this year.

MLB comes to Boxee
Boxee has also inked a deal with Major League Baseball that will bring MLB.tv Premium to the platform. According to the company, Boxee users will be able to watch "thousands of baseball games, live and on-demand in HD."

Users will be able to pause and rewind a live game. But in order for them to access those games, they will need to sign up for the MLB.tv Premium service, which costs $89.95 per year or $19.95 per month.

Even more content
Since Digg has a popular video section, it only makes sense that Boxee would sign a deal with the social-news site to bring its videos to the platform.

According to Boxee, users will now be able to watch Digg's most popular videos, as well as upcoming clips. Users will soon be able to Digg videos from within Boxee, but that feature is currently not available.

Boxee also signed on with Tumblr to give that site's users the option to stream music and slideshows to Boxee. The company said more Tumblr features are on the way, but it wouldn't divulge what those are.

As if that's not enough, Boxee also announced that Current TV shows are now available on the platform. Current is home to popular shows, including The Rotten Tomatoes Show, InfoMania, and SuperNews.

New navigation
Since Boxee has made so many content enhancements, the company apparently had to improve its user interface. Boxee now features two new categories: Applications and Local Media. The Applications menu will feature all the Internet content available for the platform. The Local Media menu lists content from the user's computer and local network.

Cable operators and media companies are cautiously dabbling in on-demand online video, but this is one case where caution could be as dangerous as recklessness.

Recently, the nation's two largest cable operators have been talking about offering their cable lineup to subscribers online so they can view their favorite shows on their computers. And now, YouTube, the site Viacom sued for more than a $1 billion in 2007 and threatened to have shut down, is signing deals with big studios like Sony Pictures and Lionsgate, as well as TV network CBS. (CNET News is published by CBS Interactive, a unit of CBS.)

All this recent activity seems to suggest that cable companies and big media companies finally understand that the Web is their future. People want to watch what they want when they want. And the Internet provides an ideal way to connect people to their favorite content.

While these efforts are a step forward, the cable operators and the media companies are still trying to maintain control and strike a balance between the old and the new. Their biggest fear (and a reasonable one) is disrupting an extremely lucrative business model that has served them well for the past 30 years. But experts caution that if they move too slowly, they could risk losing everything to digital piracy.

In short, do you give up some of your existing revenue and hope you can make that money back through advertising? Or do you stick with your current model and fight what could be a losing battle to protect your copyrights?

"There is no way to put the genie back in the bottle now," said Avner Ronen, CEO of Boxee, a company that acts as a sort of browser for the TV to help people find and play online video on their big screen TVs. "But if users can't easily get the content legally and reasonably priced in a reasonable amount of time, they will go out and get it some other place. That has been proven with music, and video is no different."

Appetite for online video grows
There is little doubt the online media age is upon us. Movie studios and network TV companies have been serving up popular shows online for at least the past couple of years. And now the nation's two largest cable operators, Comcast and Time Warner Cable, are testing services that allow their cable TV viewers to watch their regular cable lineup over the Net on their computers.

Time Warner Cable, the second-largest cable operator in the country, is already testing its online video-on-demand service in Milwaukee. The service allows Time Warner customers who subscribe to HBO, for example, to watch episodes of "Entourage" or "Flight of the Conchords" online through the Web site. Subscribers who don't pay for HBO, don't get access to those shows. Comcast isn't in tests yet, but the company plans to offer a similar service available through its Fancast Web site later this year.

Unlike video Web sites such as Hulu.com, which is owned by NBC and News Corp., and CBS' TV.com, the cable online video services are not free. And it doesn't sound like the cable operators have any intention of offering them for free.

"We believe we can add more value to the entertainment that people are already paying for," said Sam Swartz, executive vice president for Comcast Interactive Media. "We recognize that consumers have different ways to consume content. Some will want to view it on a PC. Others will want to see it on a TV. Our job is--for the same subscription fee--to offer it to consumers on whatever platform they want."

One thing has become very clear to be successful in offering online video: Content is king. And sites that don't have it die. Just look at Joost, which was founded in 2007 by Janus Friis and Niklas Zennstrom, the same pair who founded Skype and Kazaa. But the company had trouble landing top TV shows and films and two years later, it's on the auction block.

Meanwhile, NBC and News Corp.'s Hulu.com has flourished providing online access not only to NBC's and News Corp.'s own content, but also TV content from others, as well as some movies. CBS has also gotten into the game by offering some of its TV shows online through its Web site TV.com. And now movie studios are courting the once loathed and feared YouTube. The site owned by Google recently signed distribution deals with Sony Pictures, CBS, Metro-Goldwyn-Mayer, Lionsgate, Starz, Discovery Communications, and National Geographic.

Show me the money
Media companies plan to make money from these services through advertising, a model that has worked well in the broadcast world for more than 50 years. But making money in advertising on the Web has so far proven harder than in the broadcast market.

The problem is that media companies make more money from airing a show on broadcast than they do online, even though a lot of people who record their television shows with a DVR fast-forward through the broadcast commercials. And viewers of Hulu can't forward through the commercials offered during their shows. The other problem is that advertising firms get paid bigger budgets to develop advertising for TV spots than they do for Web spots, providing an incentive to push clients toward TV advertising rather than online advertising.

Another major problem with the current business model is that cable companies spend tens of billions of dollars each year to license content from media companies. They then turn around and sell subscriptions to their service to consumers, who view the content. Popular content, such as the sports channel ESPN or the all-news channel CNN, are very expensive. And if consumers can get the same content from those sites for free on the Web, why would they pay $100 or more a month to subscribe to cable?

Understandably, cable operators have pushed hard to keep media companies from offering too much of their content for free online.

"Media companies are getting pressure from the cable companies to not put as much content online," Ronen said. "Cable is saying, 'Why should we be helping people cut the cable cord when we're paying $20 billion a year for content.'"

Still, online distribution represents a new opportunity for media companies providing them the chance to monetize older content that sits unused in their archives as well as bringing in additional revenue from new products associated with popular shows.

As media companies try to figure out how to make more money from the Web while not biting the hand that feeds them, i.e. the cable companies, they are experimenting with which content to distribute online and how much of that content they make available for free to online viewers. For example, NBC offers full episodes of all three seasons of the show "Friday Night Lights" on Hulu.com. But the super-popular comedy "30 Rock" only offers full episodes of some of the most recent episodes.

Content owners have also restricted the use of services, like Hulu, overseas, since there are special content license deals with foreign broadcasters for TV shows and movies produced for the U.S. market.

But there have also been occasions where media companies have actually taken content off the Web. Earlier this year, Hulu.com upset fans of the FX show "It's Always Sunny in Philadelphia" when it yanked almost the entire three seasons of the show. Distraught users sent angry messages on Twitter and Hulu was forced to post a response in a blog saying that it was FX's decision to pull the show and not Hulu's.

The situation demonstrated that it is the media companies, and not video-playing Web sites, such as Hulu, that have control of the content.

Media companies, likely nudged by the cable companies, have also tried to keep the online video viewing on the PC. For much of this year, Hulu has been blocking Boxee, a software application that provides an easy way to discover and view online video on the TV.

While the media and cable companies may be merely trying to protect their copyrighted content and existing business models, they may find their attempts to control the distribution of their content fruitless. Boxee CEO Ronen said that these companies are risking losing complete control of their content through piracy.

"Piracy will become an even bigger concern for them if they don't give viewers what they want," he said. "It's already happening, especially overseas where you can't get access to most of this content legally."

But Comcast's Swartz said that the online video market is still young. And experimentation is necessary at this stage.

"We are in the bottom of the second inning when it comes to putting content online," he said. "Content owners are realizing that they put some content out there and they aren't making money. Now they are at the point where they are trying to figure out which business models will work."

Of course, the big question is whether they will figure it out in time. The game may only be in the bottom of the second inning, but it could be over a lot quicker than Swartz or any of the other cable and big media execs realize.

More than 800 digital-media enthusiasts in New York RSVP'd for a Tuesday night "meet-up" held by Boxee, the TV browser software company that's ambitiously (and controversially) aimed to make it possible to have a full Web content experience in your living room.

Right now, Boxee sources content from outlets such as Comedy Central, Netflix, CBS (which publishes CNET News), and Web video content hubs such as Blip.tv and Next New Networks.

In conjunction with the get-together, Boxee (still available only for Mac and Linux) made a few notable announcements: First of all, it's overhauled its application program interface (API)--which was only three weeks old to begin with--so that developers can build more complex applications for the platform.

There are a few new ones at launch: streaming-radio provider Pandora now has an application to bring its content to Boxee, as well as terrestrial-radio hub RadioTime. A third-party company called BoxeeHQ has also created an app to stream content from PBS.

Boxee's content-browsing software is now built on the XUL framework, which makes it a "remote cousin of Firefox," CEO Avner Ronen said. It will detect a video in a regular Web page and then attempt to pull it into a full-screen view. Guess what this means: Content from Hulu will be back, at least for now.

For those who stepped in late: Hulu, the joint venture between NBC Universal and News Corp., had been available as a channel on Boxee until access was blocked at the request of content partners. Boxee brought it back by pulling in Hulu's RSS feed, but then Hulu blocked that too.

Still in alpha test mode, Boxee has gained a loyal following among geeks who love its hackability, futurists who see it as the best hope for the why-won't-it-happen-already convergence between TV and the Web, and people fed up with subscription cable services. But on the flip side, it's still unclear as to how the start-up will dig through the complicated stratigraphy of media industry regulations, and it's also unclear as to how it will make money.

Ronen hinted that an "app store" format will be part of its strategy, letting developers charge for their applications and taking a cut of sales, in addition to advertising. Also down the pipeline: an improved search feature that will let members search all Boxee content at once rather than only within individual content providers one at a time.

Boxee also released its first iPhone app this month. It's not a video app, though--it's an app to remotely control the Boxee browser over a Wi-Fi connection. Ronen says the company's received "great feedback" on it.

2nd Update 10:10 a.m. Saturday: To include an updated statement from Boxee.

Update 4:30 p.m. To include quote from Boxee blog post.

Less than a day after Boxee made adjustments to again access Hulu's content, the video portal responded Friday by again blocking Boxee. But on Saturday morning, Boxee presumably made more changes and the service was back to accessing Hulu (who can keep up?).

Boxee is a startup that streams Web video to television set-top boxes. Dave Mathews, who works as an evangelist and adviser to the company, expressed frustration Friday at what has become a game of cat and mouse between the two companies. Mathews said that this a game Hulu can't win.

"These guys are so shortsighted," Mathews said. "It's an RSS reader. What our open-source community will do is just make the Boxee browser look at the Firefox browser."

Mathews said Hulu is obviously blocking Boxee's browser. He described a situation where the two companies enjoy a good relationship and fighting is pointless.

A Hulu spokeswoman was not immediately available to comment.

"Boxee is one of the referring IDs," Mathews said. "We do that on purpose. By excluding our browser they are making a biased move. It would be just like them shutting off Chrome. We're trying to empower the customer.

"From Day 1, we played by their game plan," Mathews said. "We want a good relationship with them."

Boxee released a statement on the company's blog Friday afternoon.

"To our users: if you choose to use Boxee as your media browser to view legal and publicly available content on the Internet, we will do everything we can to ensure that you can access it, no matter what the source...while some of the best things in life are free, sometimes you have to work hard to get them."

Last month, Hulu said in a blog post that its content suppliers asked the video portal to cut off Boxee's access to Hulu content. ""We are respecting their wishes," Hulu said in the post.

Brad Stone at The New York Times was first to report this story.

Boxee CEO Avner Ronen told CNET News last month that he would try and convince Hulu executives Boxee was good for the video site and content producers. On Friday, it became obvious those talks had come to little and Boxee decided to take matters into its own hands.

"Like IE, Firefox, or Google Reader, the RSS reader supports Google Video, Yahoo, YouTube and feeds from many other websites," Avner wrote in a blog post. "While it's not as attractive or robust as our previous Hulu application, it will additionally support Hulu's public RSS feeds."

Media-center start-up Boxee, which aggregates Web video for television set-top boxes, has launched a new version that restores access to video hub Hulu. The NBC Universal-News Corp. joint venture had pulled its content from Boxee after content partners took issue with it.

But it's not really the same: Boxee has brought back Hulu by extending its support for RSS feeds, and is pulling the video content in that way.

"Like IE, Firefox, or Google Reader, the RSS reader supports Google Video, Yahoo, YouTube and feeds from many other websites," a post on the Boxee blog by CEO Avner Ronen read. "While it's not as attractive or robust as our previous Hulu application, it will additionally support Hulu's public RSS feeds."

Industry talks continue, the post continued. "While we don't come from an entertainment or cable background, we are learning quickly. It is a complex business. Our meetings with Hulu and their content providers reinforced that point," Ronen wrote. "They are trying to adjust to a new reality, but they need time."

Hulu CEO Jason Kilar has a tough job ahead, if cable companies are pushing content providers to scale back Web distribution.

(Credit: Greg Sandoval/CNET Networks)

There's nothing connecting Hulu's decisions to pull out of TV.com and Boxee on the same day, according to sources close to the company.

Hulu's managers were motivated by very different reasons in each case, said the sources (TV.com is owned by CBS, parent company of CNET News). Nonetheless, the decision to dump Boxee is bad for the start-up, for Web video fans, and for Hulu.

In a blog post published Wednesday, Hulu executives said they have asked Boxee to remove their content--starting on Friday-- because their content partners don't want their material to appear on the service. Hulu has more than 100 content providers, but my sources say the companies Hulu is referring to are its founders: NBC Universal and News Corp.

A Hulu representative declined to comment.

Boxee's software enables owners to watch Web content on their TVs. The decision to prevent Boxee from delivering Hulu's content appears designed to prevent TV shows and films from "going over the top." That's the term used to describe when cable or broadcast TV shows are made accessible via sources other than cable or broadcast.

Peter Kafka over at the blog All Things Digital suspects the big cable companies of pressuring TV networks and film studios to scale back the content they provide Web services. This makes sense, but why pick on Boxee and Hulu? Netflix or YouTube would be more natural targets, and we haven't seen content being pulled from those services.

Indeed, News Corp. and NBC Universal just handed Netflix an advantage. At the same time Netflix's streaming service is branching out via Xbox, the Roku Player, and LG televisions, Hulu's distribution is shrinking.

I've heard some people in the tech sector speculate that Hulu could be scaling back the number of sites that offer its videos to take more of a "walled-garden approach." At this point, that scenario doesn't seem likely, as dozens of other outlets continue to offer Hulu's movies and shows, including Yahoo and MSN. Kafka's thesis seems more logical.

Earlier this month, Glenn Britt, CEO of Time Warner Cable, was trying to explain how his company lost $8.16 billion in the fourth quarter. He laid much of the blame at the feet of Web video services, which he suggested are starting to lure customers away from cable companies.

"The reality is, we are starting to see the beginning of cord-cutting," Britt said, according to a story published by The Associated Press."People will choose not to buy subscription video if they can get the same stuff for free."

Techies will surely scoff at this. They will say Time Warner Cable and Comcast are not the future. Online video is the future. And they will be right, of course. Consumers want to watch TV shows and feature films when they want, and the Internet gives them the power to do that. Web services also offer content mostly on an ad-supported basis, which is cheaper than paying a monthly cable bill.

But here's the reality. The guys running big entertainment companies won't be around in the future if they don't make their numbers now. Cable companies deliver a huge amount of revenue. The money that the networks and film studios make off Web distribution is a tiny fraction of that.

These executives are thinking about self-preservation, and that's what we all do. They should, however, remember the resourcefulness of the masses, and that if the studios and networks don't enable consumers to acquire content the way they want, they'll obtain the material someplace else. These executives should remember that file compression technologies are improving all the time and that someday--perhaps sooner than later--it will be nearly as easy to share large movie files as it is to share music files.

Already, I've seen anecdotal evidence that mainstream America is catching on to movie-sharing sites like The Pirate Bay. In the past week, a friend and a family member told me that they download films illegally. These are guys who aren't criminals or even necessarily tech-savvy. They can afford to buy DVDs. Both said they do it because it's easy.

The film and TV guys have always snickered at how the music industry misplayed Napster and Internet piracy. In any discussion about the music industry's piracy woes, film and TV executives I know have expressed confidence that their approach of making it easy and affordable for consumers to acquire content online would be the best defense against illegal file sharing. Why steal when it's so simple to acquire shows and films legally?

If they retrench and try to make it harder for people to acquire shows and films online, they are doing something they always said they wouldn't: follow in the music industry's footsteps.

Fresh from removing content from TV.com, Hulu has now requested that Boxee, the maker of media-center software, stop making Hulu's videos available, according to a statement posted to Boxee's blog.

"Two weeks ago Hulu called and told us their content partners were asking them to remove Hulu from Boxee," Boxee said in the post. "We tried (many times) to plead the case for keeping Hulu on Boxee, but on Friday of this week, in good faith, we will be removing it. You can see their blog post about the issues they are facing."

Hulu, the video site formed by NBC Universal and News Corp., said in a note on its blog that the problem rests with their content partners.

"Our content providers requested that we turn off access to our content via the Boxee product," Hulu wrote. "We are respecting their wishes."

Boxee CEO Avner Ronen told CNET News that he was disappointed by the decision and attempted to convince Hulu executives that Boxee was good for the video site and its content partners.

"I hope that they will realize the opportunity is greater than the threat," Ronen said

What exactly that threat is was unknown to Ronen and Hulu didn't spell out the reason its content partners were down on Boxee in its blog post.

Hulu's decision to leave TV.com, owned by CBS (parent company of CNET News), is unrelated to the decision to pull out of Boxee, said a source familiar with the negotiations. Hulu said that in the case of TV.com, it was a contractual issue. As for Boxee, Hulu was forced to honor the request of its content providers, the source said.