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Netflix partners Roku to launch set-top box
Territories covered
North America
USA,
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Published:
21-May-08
Netflix has launched the Netflix Player, a set-top box (STB) capable of streaming movies and TV shows from Netflix to the TV set. The device is manufactured by Roku and costs $99.99 (€64).
The Netflix streaming option is only available to subscribers of Netflix's online rental service – streaming is bundled into the subscription plans at no additional cost. Subscribers to the cheapest package can access two hours of streaming video content each month whilst those subscribing to higher tier plans have unlimited streaming access.
In order to stream content through the STB, subscribers must first queue up their video selection on the Netflix site using a PC, before accessing the stream through the broadband-connected box.
Our take...
The Netflix Player is the first in a series of devices set to launch in 2008 featuring the Netflix client. In addition to Roku, Netflix has partnered LG Electronics and two other as-yet unnamed manufacturers to integrate the Netflix streaming option into devices.
The relatively low price point and the instant availability of content streamed through the STB may help to encourage consumer adoption of the Netflix Player. But Screen Digest believes that, as a general rule, STBs offering video streaming as a primary or sole function typically cultivate low installed bases. Consumers are reluctant to pay for another box to sit beneath the television set, particularly when they are accustomed to Pay TV operators or telcos offering heavily subsidised STBs to drive content sales.
In addition, Netflix's core business model is also likely to hamper sales of the device. Subscribers to all but the most basic of Netflix packages can rent an unlimited number of DVDs each month and will already have a DVD or high definition disc player connected to their television set. Subscribers may be unwilling to pay for a device which offers them a much smaller catalogue (10,000 streaming titles vs. 100,000 in Netflix's DVD library), the vast majority of which are post first-run.
For some subscribers the ability to view streamed content on the television screen will encourage use of the Netflix Watch Instantly option. But even if consumer uptake of the box is low this should not impact Netflix's digital strategy. At present Netflix is not gaining direct revenue from usage of its streaming service - streaming is provided as a value-add to subscribers with the purpose of reducing churn from the core DVD rental business.
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