As Google battles Apple for your TV, Boxee unveils a third way

November 12, 2010: 1:28 PM ET

The new set-top, social home theater box isn't about challenging Apple and Google, says Boxee's CEO. It's about changing the philosophy behind TV and online video altogether.

Earlier this week, Avner Ronen launched the Boxee Box. Almost a year-and-a-half in the making, the set-top box represents the latest step for the start-up whose software until now offered a convenient free, partially-open source software solution that aggregated users' digital content -- Netflix, VUDU, Pandora, Facebook, Twitter -- into one portal.

With Boxee Box, Ronen and his crew of 28 have finally completed the equation, marrying Intel (INTC) and D-Link hardware with their software, thereby entering a field dominated by heavyweights like Apple TV and Google TV. Along the way, Boxee has also overcome some important hurdles, including a long-awaited partnership with Hulu that brings more prime TV content to users.

Ronen dropped by the offices for a visit to show off the Boxee Box and weigh in on the crowded online video set top box market. Below, a transcript of our conversation:

Fortune: Tell us a little bit about the Boxee Box and what it does.

Avner Ronen: So the Boxee Box is a device made by D-Link and sells for $199. It's made for people who use the Internet as their main source of video. If you use Netflix and Hulu and YouTube, you'll get lots of video just on your computer, and you want to do it on your TV, the Boxee Box may be the best solution for you. It will also the only box you'll need to connect to your TV screen, especially if you're a young person.

How does it improve upon previous iterations of Boxee?
So this version that we've released. It's the first time it goes [directly] on the TV now. Before, you could only run it on the computer. We also announced that Netflix is coming in high-definition, and we're working to bring Hulu Plus onto that platform that we have. That we have VUDU, which provides thousands of movies in HD. If you're interested premium content, if you want to watch premium movies, TV shows that are just out, you can do that with Boxee, but if you want to watch the long tale. You a know a TED talk. If you want to watch what your friends are watching on Hulu, what your friends are sharing. You can do all that on a TV with a simple remote. We think for a whole generation, for them, that's going to be the experience of generation.

It's not on the remote right now, but you're going to include a Netflix button on the otherwise simple Boxee Box remote. Why is that?
Well, we think the idea of Netflix makes perfect sense for somebody. For them, Netflix is their most favorite app. I think many of our users today swear by Netflix. For them, it's a world of movies. They sit down, they get their recommendations. There's a bunch of discovery options on Netflix, the hours a week they spend on this service. So being able to click on their remote to launch it, I think makes life easier for many people.

Speaking of that, you also just announced that Hulu partnership. Basically, Hulu is now coming to Boxee.
Yeah, we're working with them. We've been fans of Hulu since day one. But we've had our difficulties in the past. If you look at that young consumer, probably movies is something that's synonymous with most people. Movies are synonymous with Netflix, and TV is synonymous with Hulu. Being able to bring both is really a combination that I think is going to delivery on an amazing experience for users.

Some have wondered what's taken so long to get Hulu. It's been a few years.
Yeah, I think the issue there was the business model was not necessarily there to make the TV networks comfortable with having people comfortable on a TV screen. But now that there's Hulu Plus, and if you can pay a monthly fee to get that content, I think it's less threatening and less cannibalizing to their traditional model. And now there is a Hulu Plus out there. You can get it on your iPad, you can get it on TVs, and I think that helps the networks with the transition which is important.

Some content providers still won't post their content online. How do you get around this problem so consumers can get what they want while rights owners are still satisfied?
I think eventually what's going to happen is the rights owners are going to follow the users. There are millions and millions of users out there using Apple and Google and Boxee and Microsoft and Sony and what ever is out there with credit cards wanting to consume that content, willing to pay for it, then the media companies will have to figure out a way to address those. Talking about CNN. I go onto CNN.com, I have great content, but I don't get the CNN live feed, right? But if there's going to be enough people out there willing to pay either for a bundle or either pay directly to CNN for that right to watch it, eventually, CNN I guess will address those users.

When you started developing Boxee about three years ago, it was a different time, a different space. Not nearly as competitive. Now the space is dominated by competitors like Apple and Google. How has their emergence changed the way you think, or your strategy?

I think Apple is a very different product than Boxee in philosophy and in execution. It provides a very different experience, so I think they cater to a different audience. Basically for you, the world of video is iTunes and Netflix, then Apple TV is going to be a great solution. But if you're also interested in content from other places, for instance CNN or New York Times, or engadget or what ever it is, then Boxee is probably the better solution for you.

We're probably closer aligned with the approach of Google, which is much more open. The difference I think between Boxee and Google I think is that Google is very search-centric and very web-centric, and we think social is going to be the biggest driver of consumption on TV and the people will want made-for-TV experiences rather than the traditional web experiences on their TVs.

Do you feel that you stand to benefit from the competition?
I think we already do. Google and Apple being out there, first raises awareness for the category and demand among consumers, but also the fact that Google is bringing back the browser to the TV screen and bringing applications drives the media companies to address it and Turner has made several sites including a version of CNN available in a 10-foot design, designed in HTML for your TV. HBO has done it, and The New York Times has done it. We think there's going to be thousands of these that are coming, so the experience is going to be much better for the user, and I think it's going to expedite the adoption rate for everybody.

And with Boxee Box emerging on the market right now, do you feel you're well-poised to capitalize on the market?
I think so. I think we're still in the stage though where it's early adopters. I don't think that the mass market consumer is aware enough or interested enough or that the solutions are easy enough to be relevant, so we're still talking about people who are more savvy about technology, that have made significant changes to their consumption and for them, they get lots of shows and movies they use online, and they just want to do it on TV. So, I think it's still an emerging consumer behavior. But I think over the next five or 10 years, there's going to be a huge shift in the industry.

People are going to change their behavior, and it's going to be mass market. It's going to change the business model, and it's going to change the way content is produced, and the way it's being valued.

What have pre-orders and sales been like so far?
It's been amazing. Much more than we thought. When we announced the pre-order, we went to be number three on Amazon's overall bestsellers. We launched the product with D-Link in 33 countries on the same, which is huge for a startup. We're going to be in more than 10 different retail and e-tail locations in the next week. So preorders have been amazing for us, especially for a company with no track record. No reviews out there, nothing. Just expectations. We have hardcore fans I guess who are really looking forward to get their hands on the box.

Currently, you have Zach Klein, the cofounder of Vimeo and Connected Ventures, as your Chief Product Officer. Will his role change now that the Boxee Box has launched?
I think Zach has made a significant difference for the company. He came in and brought a lot of his vision and the design, as you can see with this version of Boxee. I think for us, there's not going to be much change. It's still a software company. We're still focused on experiencing the best 10-foot experience. We'll probably need more help with people who can help us design also mobile experiences and traditional web experiences because we think that's the next place we should go. If you're using Boxee, you should be able to use Boxee on any screen, not just the TV screen.

How long do you think it'll be before content creators make content more accessible and users can just go to one or two places to get that content?
I think content will still be available from a variety of sources, but definitely there needs to be one place you can go and you can have the comfort you can find that content. To know that it's there and that it's relevant for you, maybe it's going to surface for you without you searching for it. I think this is a completely new field and nobody dominates it now. We don't think search is the answer. It's only the partial answer to that problem.

We're going to try to take a stab at it. We're going to build Boxee as a brand that people know, that they can go to to watch any kind of video, and I'm sure others will, and we hope that we'll be able to be part of the solution. A few years from now, people will be talking about Boxee as one of those things.

So it sounds like Apple and Google being what they are, you view it as a level playing field.
No, I mean they have much better and easier way to approach the user. Bigger budgets. Bigger brands. So I assume they'll be bigger than us. I just think it's not a winner-takes-all space. Apple could be very successful in the market and own like they own the smartphone business and can own 25% of the market. Google can be very successful and we could be at the same time as well.

If Boxee as a company can get to 10 million users, it's going to be a huge business. So I think it's totally doable. Innovate well on the product, execute well on the product. And we do a decent job on getting the solution, I think we'll do very well.

Taking a look at the Boxee Box itself, it's a pretty unique design. Admittedly though, some might say it's not quite stackable.
It is stackable. You just have to put it on top.

Fair enough.
We definitely went with something that is different. We just thought that we're such a different type of solution, and we're a startup, and we can be bolder and more aggressive and take a risk. And we realize that some people will love it, and some people hate it. We hope more people will love it than hate it.

There are also practical elements to the design. There's rubber on the bottom so if somebody's trying to move it, it's pretty solid right there. The fact that the inputs are all lined up in the same direction, it means if you line up multiple cords, they'll all kind of fall towards the same place. So there are practical considerations to the design. But mostly, we wanted to have something that could potentially be iconic, that people love it and put it next to a TV and it looks like a small piece of art.

Well, Avner Ronen, cofounder and CEO of Boxee, thanks so much for joining us.
Sure, thank you.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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