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Chat with Boxee on TV's slow embrace of the Web

The Web has upended the newspaper, music, and telephone businesses. Consumers have cut the chord on their home phones. They've stopped buying CDs. And newspapers (sigh), well you know where that's going.

But a stubborn final frontier, however, has been the living room television. Will consumers replace cable and satellite television service to watch their favorite shows online? Yes, but not without a fight from cable carriers, according to Boxee, a New York-based company trying to become a Web browser for your television.

"Even though the industry is very much trying to protect the old model, we're seeing more and more companies experiment," Avner Ronen, chief executive of Boxee, said in a phone conversation Tuesday. "Content will have to follow users eventually because the reality is that Internet users will obtain the content anyway and the best way to fight them from getting it illegally is through affordable choice."

The cable industry's TV Everywhere strategy, expected to launch soon by Comcast and Time Warner, would put more content online for free, but only for subscribers to their cable and broadband services.

Such a move runs counter to a push in Washington to break down the walls on the Web and allowing consumers to access whatever content they want and in whatever form they choose. The FCC is pushing for Internet network operators to provide open access to any legal content without unfairly prioritizing some forms of content over others.

"I think this is a very valuable service if you are already a subscriber," Ronen said. "But I don't think it's in the best interest of the consumer, who would have to do everything behind a pay wall. It's fine that some content is available for me through pay, but I shouldn't have to pay a cable carrier for a bundled service to get it."

A rumored merger between Comcast and NBC Universal could give the nation's largest cable service provider greater control of television content as it tries to figure out how to deal with free online video. Such a deal would have to be vetted by the Justice Department to see if it would anticompetitive and also by the Federal Communications Commission.

What's taking content creators and carriers so long to change? Their predicament is much like that of the newspaper industry, Ronen explains. The content creators see contracts with carriers such as Comcast and DirectTV as a sure way to get more money than they could through online ads, which pay much less. And carriers, for their part, relay on deals with creators to keep subscribers hooked into the unique content offerings on the services they carry.

"As we move to the Internet, they want to make sure a conversion from analog dollars to digital pennies doesn't happen," Ronen said.

How has this resistence affected a startup like Boxee? The company has 700,000 subscribers to its service, which is in alpha testing mode.

"The timing is actually right," Ronen said. "If we were talking about Boxee five years ago, it would have been too early. Every month or quarter that goes by we're seeing better content go online and what we're trying to do is help those media companies experiment with those new models."

By Cecilia Kang  |  October 28, 2009; 8:00 AM ET
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1st graf, 2nd sentence: The word 'chord' should be changed to 'cord'.

Posted by: ajscud | October 28, 2009 11:24 AM | Report abuse

So I get my TV through Dish Network and my Internet from an AT&T DSL. Do I get all that content for free?

What I would really like to see is an analysis of why Internet ads fetch less than broadcast ads. It makes zero sense to me. The price of a broadcast ad is based on a guesstimate of how many people of what demographic are watching. In a fair world you would then subtract out everyone with a DVR since they don't watch commercials. In the Internet world you can make everyone sign up for an account, you don't have to get their name just a zip code and basic demographics to protect privacy, and make them watch the ads. Yes they can get up and go to the bathroom just like with broadcast TV, but you can force the ad to play. So now you know exactly how many people in what demographic watched an ad. If I was an advertiser this would be what I would want. Kind of like Google ad words but with high quality demographic information.

Posted by: caribis | October 28, 2009 3:40 PM | Report abuse

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