The Game Changer?

Yesterday, Netflix and Roku announced the Netflix Player. This device, priced at $99.99 and about the size of a paperback novel, can stream the portion of the Netflix catalog that's available for immediate download (approximately 10,000 out of 100,000 movies and television shows) to any television. The player has composite, component, S-Video and HDMI connections. It supports both SD and HD, although Netflix only offers SD streams at this time. It has both wired and wireless (802.11g) Ethernet connections.

The least expensive Netflix plan that provides unlimited downloads is $8.99/month, going to $15.99/month (the only difference between the plans is the number of physical DVDs that can be out at any one time--one for the $8.99 plan, three for the $15.99 plan.)

The reviews of the Roku Netflix Player so far have been positive; the biggest drawback is the relatively limited selection of movies available for instant streaming. However, this is an issue that I think will be resolved over time, as more studios see Netflix's service as a variation of VOD, at least for catalog material.

In the past, I've believed that the chances for third-party set-top boxes have been slim, but this Netflix/Roku box could be a game-changer. The price is so low that the player is almost a throwaway item; as one reviewer pointed out, if you watch 25 movies, the incremental cost of the box is only $4 per movie. The box already supports HD, when Netflix makes it available.

The Netflix/Roku player is a test case for whether or not a managed network is really needed for IPTV. The "standard definition" of IPTV includes a managed network with controlled Quality of Service and Quality of Experience. If Netflix and Roku can deliver acceptable performance "over the top", on the public Internet, it makes it hard to justify huge capital equipment expenditures in order to deliver IPTV over a closed network.

For example, in the U.K., BT is using VOD as its primary "value-add" for subscribers to its IPTV service, since the company relies on the over-the-air Freeview service for broadcast channels. Freeview, however, is launching its own over-the-top VOD service, similar to the Netflix/Roku service. If it works, where does that leave BT?