Vudu's sleek and sexy set-top box: five years later

  • Chicago (IL) - Set-top box maker Vudu released its first application for the iPhone and iPod touch last week. It lets you remotely browse, search, rent and purchase content from a catalogue of 13,000 movies and TV shows. The convenient software extension comes during tough times though. Like other players, Vudu is trying to pitch its box to consumers. And even if economy wasn't in a downturn, Vudu would still face an uphill battle because the market is already crowded and fragmented with no clear leader in sight.

    IPTV is an expensive business. Just ask Santa Clara-based Vudu, a startup founded by WAP creators Tony Miranz and Alain Rossmann with a little help from $21 million courtesy of Greylock Partners and Benchmark Capital - and further fueled by an additional $40 million raised last April. The company has been secretly developing its media-streaming gadget, the Vudu Box, and an accompanying service since 2004 - but the New York Times stole the surprise by revealing in late April of 2007 that Vudu was cutting deals with Hollywood studios in a build-up of its (then 5,000) movies library.

    Vudu now claims that it holds the "world's largest HD library in existence," with over 13,000 movies and TV shows. More than 1,300 are in HD, over twice as much as Apple's iTunes Store which to this date carries 600 HD titles. Despite the content advantage though, Vudu struggles just like others in this market including even Apple who still labels Apple TV as a "hobby business". On top of that, Vudu faces distribution issues: Prior to a Best Buy deal dating back to last summer, Vudu Box had been available at online retailers only.

    Vudu Box: Apple TV with a twist

    Available in a nice black casing, Vudu Box ships with a futuristic, sleek remote that works with radio frequencies on greater distances and even through obstacles (unlike traditional infrared remotes). It has five buttons and a scroll-wheel for navigating between menus, making a selection and fast-forwarding and rewinding a movie. Vudu Box is kind of like Apple TV, but with a twist: It hooks up to your broadband Internet via an Ethernet cable to get content from another user's Vudu Box via peer-to-peer networking. The gadget only stores the first couple of seconds of each movie in a catalogue, just enough to enable instant playback while in the meantime it connects to other boxes on the network to start streaming remainder of the movie.

    As a result, you get instant and uninterrupted playback experience, given you're on the required 2 Mbps connection for SD content or 4 Mbps for HD content. Those who are on 1 Mbps can mark the content for download and later viewing. There is also a free Vudu Movie Catalogue application, which posted on the App Store last week. It lets owners of iPhone or iPod touch connect to their Vudu accounts to remotely search, browse, rent or purchase any content from the catalogue. Once the transaction is completed, it immediately triggers Vudu Box at their homes to start downloading.

    The Vudu Box allows you to access the catalogue of over 13,000 Hollywood movies and TV shows for rental or purchase with 1300 in HD quality. The company claims it is the "world's largest HD library in existence." For comparison, Apple's iTunes Store plus Apple TV combo offers 600 rentals in HD.

    Continued on the next page: Hollywood-dictated usage rights, Broadband speed and ISP capping limitations, Conclusion...


    Hollywood-dictated usage rights

    Vudu Box does not come with an obligatory service fee. Instead, rentals and purchases deplete your online account where you add a selected amount of money. The service also offers unlimited rentals and remote storage that keeps purchased movies ready for later on-demand viewing (to help save built-in storage which can hold roughly 50 SD movies). Hollywood-dictated usage rights are similar to other devices: Rented titles are stored on the box for 30 days, with the usual 24 hours window to finish watching once you started.

    Hollywood also dictated that movies and TV shows can only be rented in HD, not purchased - just like with Apple TV. The box does not stream content that resides on a computer the way Apple TV does, nor does it provide cable and satellite functionality like TiVo. Unfortunately, Vudu Box (and others boxes) now face some unfair rivalry that was hard to predict when engineers started developing the device five years ago.

    ISP-capped bandwidth and sluggish speeds limit appeal

    Entrenched cable and satellite operators still deliver the content most efficiently as they don't have to cope with sluggish broadband speeds in this country. Of all the set-top boxes, Vudu is best positioned to tackle the Internet bottleneck with its unique preloading-plus-streaming combo. Still, that's of little use to users who run on less than 4 Mbps as they can't stream HD movies. Yes, you could still download movies for later viewing but that negates the whole purpose of on-demand entertainment and simply puts IPTV two ladders bellow cable and satellite.

    When there is enough bandwidth, it's often capped intentionally by ISPs who push their own IPTV services that don't suffer from the same capping rules (as they run on their own ISP-owned network). Of course, bandwidth and capping limitations are not specific to Vudu, but plague other IPTV players as well.From a broader perspective, boxes like Vudu or Apple TV failed to win consumers partly for this reason.


    Battle for the living rooms is anything but over

    Yes, some people dig personal video recorders like TiVo for their scheduled recording capabilities, but most resist putting another box next to their TVs. On top of that, consoles like Xbox 360 and, to some extent PS3, now also stream Hollywood entertainment via Internet - although this added benefit is primarily an augment their main gaming purpose.

    In short, the environment for set-top boxes couldn't be worse. Faced with sluggish broadband infrastructure, capped bandwidth and tough opposition from console makers and others, these vendors now have to face decreased consumer spending and a depressed economy as well.

    Set-top boxes and IPTV in general have gone a long way in their short-lived existence, but still have a long way left to go before they can truly go mainstream. One thing is certain though: The battle for our living rooms is anything but over.

    The Vudu Box has a sleek five-button remote with a scroll-wheel for navigating menus, making a selection and fast-forwarding and rewinding a movie. The gadget can also play YouTube videos, Flickr/Picasa photo albums and run casual games.

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