Roku’s next steps: Hulu, then Yahoo TV Widgets

If you read this blog often, you know I’ve been road-testing a lot of set top boxes for the past two years. I do this because I cover video, but also because it’s a disruptive moment in the history of the video and if there’s lessons to be learned about disruptive innovation, this market provides ample opportunity to be tutored. (All props to Clay Christensen at HBS, by the way, for defining the way we all look at disruptive innovation. That’s worthy of a separate post at a later date.)

After spending significant time with the Roku box during some recent sick days, I have concluded that the Roku is still the box that delivers the most punch, especially considering its price. That’s why the Roku box won our Convenience Quotient analysis on set tops last summer and it’s only getting better as the Roku team adds more content. 

The Roku is the only box that I want more than one of — one for the living room and one for the family room.

But it still has a long row to hoe if it’s going to end up in a million homes. In particular, I see a threat in the form of connected TVs. I’m writing a piece for Forrester on that topic right now, should be out in a few weeks, but the conclusion is pretty optimistic: thanks to supply-side energy, the Yahoo TV Widget space is making it likely that connected TVs will be in more than a million homes by year-end, possibly two million.  

So here’s my prescription for Roku to stay in this game. I haven’t discussed these things with the team there, but I’ll make them a matter of public record so that if I’m right or wrong, at least I’ve been bold.

1 – Get going on Hulu. This might mean starting with CBS (which is dramatically more open to radical syndication moves, as evidenced by the YouTube relationship) or Viacom, as a way to show Hulu that this is the way things are moving. The sooner ad-supported TV shows up on Roku, the sooner it’s a must-have $99 box for everyone.

2 – Become the first set-top box to implement Yahoo TV Widgets. I cannot get this widgets solution out of my mind. It’s such an elegant way to open the market to innovation and I like innovation. From what I’ve learned from the people in charge of the Yahoo TV Widgets strategy, the code to accomodate the widgets should be relatively simple to put on the moderately powered Roku box. But the beauty of having widgets on the Roku box is it would immediately relieve Roku of needing to strike separate content deals with every possible content provider. Instead, it can just let content providers develop whatever they want for the platform, making the box more valuable with each passing day. 

The fact is, every box, DVD player, TV, and game system (Wii Widgets?) will eventually implement Yahoo TV Widgets. (I know that’s music to Yahoo’s ears, but when you do the right thing strategically, it tends to work.) So Roku better hurry. 

Last thought: once these steps have been conquered, it’s time to start courting HBO and other pay TV providers to discuss delivering subscription-based content to the Roku. Not something HBO wants to do (not something Comcast wants it to do), but it’s where things are heading. And as long as HBO is priced higher on the Roku than it would be through Comcast, which is certainly what HBO would have to do, it might be feasible by 2010. 

What do you think?

Vizio takes connected TV to the max

I’ve spent much of the week blogging about pre-CES and CES announcements related to bringing the Internet to the TV. I’ve seen many of the things I was expecting: more Netflix in more devices, Blockbuster announcing it would connect to the TV, in short, big names making big plays to get to IP-delivered video and interactive content to the TV screen instead of the PC monitor.

In one of my posts earlier this week, I wrote:

Soon, there won’t be a TV maker who doesn’t offer this connectivity; that includes Vizio, in my opinion, who will clearly see the writing on the wall here. In fact, if Vizio announces something innovative early, it could really maintain its growth position in the US market.  (from Samsung Adds Yahoo! Widgets to its TVs).

As if in fulfillment of my wishes, Vizio yesterday announced exactly that. What makes the announcement worthy of a post is that Vizio not only added one or two things, it added the whole boatload. In fact, when the CES dust settles, we’ll probably find Vizio — a relative newcomer to the TV market and certainly a newcomer to the Connected TV business — will hold the title as the maker of the most connected TV. Here’s a list of partners Vizio is incorporating: Accedo (for games), Adobe, Amazon VOD, Blockbuster VOD, Netflix (so last year by now), Pandora, Rhapsody, and the Yahoo TV Widget Engine I wrote about this morning, which means Vizio will have many more content plays beyond this list relatively soon.   

Vizio is the TV maker to watch as of this moment.

Even the fact that I can no longer call them just a TV maker (they announced a $200 Blu-ray player yesterday as well) is evidence that Vizio is ready to make this recessionary year a big one for the company. And they’re in a good position to do so: value-priced and distributed through value-oriented channels, Vizio can provide high-tech at low cost without having to swallow any pride.

Vizio earns my attention because they are the first to really bring a “many devices, many services” model to the TV. This is something I have written about a lot lately, as I have been predicting it for the past year and have started to see it come to fruition. For example, last year in a speech to a 100 people, I walked them through a 2009-and-beyond TV scenario in which the new TV you bring home literally asks you which services you already subscribe to and immediately connects you to them. By bringing Amazon, Blockbuster, and Netflix into the same TV, Vizio is making my scenario real. The only thing it lacks from my scenario is a pleasing computer voice to help you navigate your many options. And I was just kidding about that part anyway.

As soon as another TV maker catches up to Vizio, my “many devices, many services” model will be complete. Now, the only thing all of these announcements are missing that I explicitly asked for is…Hulu. Add Hulu to this Vizio solution and you almost don’t need cable. Almost. But I’ll save that for another CES post after I meet with Sezmi… TTFN.

Samsung adds Yahoo Widgets to its TVs

In yet another Pre-CES announcement — eerily similar to the one I blogged about yesterday when LG pre-announced that it was putting Netflix into some of its HDTVs — Samsung late yesterday announced it was putting the Yahoo Widget Channel into some of its 2009 HDTVs. Rather than online video delivery like LG announced, this channel will be an interactive ticker that will provide layers of information (read: traffic, weather, shopping) as well as opportunities to augment TV shows with application widgets.  

Let’s see: Internet content, easily delivered to the TV. TiVo, Roku, SlingCatcher, LG, Boxee, now Yahoo and Samsung. I sense a trend here, no?

In fact, I spent some time taping CES interviews with CNBC that will roll out over the week. Like every other press outlet, they wanted to know what I expected the big trends to be this year. I had to confess that the big trends are mostly going to be the same trends that we saw at last year’s CES. Only this year, they would matter.

That’s not to say that Sony and HP’s Net-connected TVs weren’t important trailblazers on the path to the future, they were. Even Verizon FiOS, which has been playing with TV widgets for two years now, was a critical first explorer of this new territory. But their wagons have bogged down in the mud and LG and Samsung are building a nice little interstate behind them. 

The big difference between these announcements from LG and Samsung and prior efforts is that the 2009 solutions are based on open content that already has an audience. Netflix has 9 million subscribers who want that content. Yahoo provides toolbars and web experiences to millions of people each day. Plus, both solutions will gradually be augmented by adding more open content experiences such that the TV is worth one thing the day you buy it, and more later down the road when the additional content and widgets are added.

It’s the culmination of many things I’ve been writing about, so obviously I’m excited about it. However, a sober note is always in order. I’m not suggesting Samsung will sell a million of these. Even between LG and Samsung, they won’t sell a million this year. TVs just don’t sell that fast. But learning from these examples, everyone else who makes TVs will work out similar solutions (dare I ask once again for a Hulu TV?). And Blu-ray and even DVD makers will do the same. Soon, there won’t be a TV maker who doesn’t offer this connectivity; that includes Vizio, in my opinion, who will clearly see the writing on the wall here. In fact, if Vizio announces something innovative early, it could really maintain its growth position in the US market. 

Specific to TVs, my public prediction from 2008 was that in 2013, 40% of all TVs sold that year will have Net connectivity. After that period, the number will rise rapidly, not even because all people will want that, but because — like the digital camera in your cell phone — TV makers will find it easier to include Net connectivity than to exclude it.

Stay tuned for more CES announcements throughout this week. I am on CES-lite this year, only spending two days there, but will have ample opportunity to spot the best and brightest in the world of video.