Building the perfect set-top box

Roku announced this week that it signed on with Major League Baseball to deliver MLB.tv Premium to its set-top box. It's the first live content that the device, which is best known for its Netflix streaming, will offer.

But like many other set-top boxes on the market, the services the Roku box offers aren't unique to that device. Netflix streaming is available on a large and growing number of devices, including TiVo DVRs, the Xbox 360, and all newer LG and Samsung Blu-ray players and home theater systems. In addition to the Roku, MLB programming is available on the PC, through Boxee, and through various cable and satellite TV packages.

Indeed, many TVs, Blu-ray players, DVRs, and home theater systems now have a baseline configuration that makes it relatively easy to add streaming services via postpurchase firmware upgrades. At this point, adding content seems almost as simple as calling the content provider and having lawyers work up an agreement between the parties.

The problem is, those partners are not necessarily working together. The hardware providers want those streaming or download services to be exclusive to their boxes. The content providers want their entertainment to be made available on as many devices (STBs or otherwise) as possible. Those very different goals are causing set-top boxes to provide most, but not all, the services that consumers want.

One of the most glaring omissions in most STBs (excluding TiVo and Moxi) is DVR functionality. And although it's a feature many consumers want, it probably won't be coming to those products.

The DVR space is currently dominated by cable companies. Cable DVRs are cost-efficient, in that they require no up-front cost but instead require you to pay a monthly fee for using them. They also have both free and paid "streaming content" (pay-per-view, video-on-demand) that compares nicely with streaming services on other set-top boxes.

And although they don't quite boast the same software quality or the array of services other DVRs provide, it's a hard sell for many consumers to choose an $800 Digeo Moxi or a $300 TiVo--which requires a subscription fee above and beyond the monthly cable bill--instead of a "free" box with a similar monthly fee. Plus, providers are starting to open, albeit slowly, their hardware to outside developers. Earlier this year, Verizon announced a Fios TV app store, called the Widget Bazaar, that features social-networking apps, games, and online content from various sites. It's a small step in the right direction.

At the same time, Apple, which might have the easiest time breaking the trend by building DVR services into its Apple TV, will probably never do so. Apple doesn't want to get in the business of allowing its users to record content--in large part because it is in the business of selling pay-per-view content on iTunes. I don't see any other company in the STB market with any legitimate chance of joining TiVo and Moxi as DVR providers.

Are HDTVs the future?
There's another problem facing STBs: streaming content is being built into HDTVs. Those HDTVs aren't nearly as ubiquitous as set-top boxes, but there's a good chance that HDTV integration could replace STBs. Samsung and Toshiba have or are planning to add streaming options to some of their TVs. Netflix is already available on LG Broadband HDTVs (with Sony and Vizio soon to follow). It's extremely convenient. And with access to more than 12,000 films and television shows, it's quite attractive from a consumer standpoint.

Meanwhile, the Vudu service will soon be available on some LG and Vizio models, joining Netflix, YouTube, and Yahoo Widgets. It provides the identical video-on-demand streaming available on the Vudu box--but without the box.

The search for perfection
Before those sets become ubiquitous, the set-top box will reign supreme. But whether it's Vudu's streaming service, the Apple TV device, the Roku box, or the TiVo, there isn't one set-top box that currently hits the mark.

The Apple TV is a fine product, if you use iTunes, but you're forced to pay for each show or movie you download. Vudu's streaming service is great, but it provides a finite number of streaming movies that, for the most part, you're probably not going to watch. And Roku is offering Netflix streaming and MLB Premium. It could do more.

TiVo is the closest to providing the kind of content consumers really want. It has Netflix, it will soon have Blockbuster streaming, it allows you to watch video podcasts, you can watch films you download from Amazon.com, and you can stream music from Rhapsody. Even better, it's a DVR, so you can quickly and easily switch to television and start recording your favorite shows.

It's a full-featured product. But it's expensive (HD-capable TiVos start at about $250). And it requires a subscription fee on top of the fees you would already be paying to Netflix, Blockbuster (when it's made available), and Amazon for accessing their content, in addition to your cable bill. (Depending on whether you pay the monthly, yearly, or "lifetime" TiVo subscription, the monthly outlay could range anywhere from $8.31 to $12.95.) It's an expensive proposition.

We also can't forget about the Xbox 360. Its Xbox Live features are certainly far ahead of any other gaming platform. You can download films and television shows on Xbox Live. You can also stream Netflix content and--coming this fall--access Last.fm online music. (Disclosure: Last.fm, like CNET, is a division of CBS Interactive.) And although it lacks DVR features, the fact that live TV streaming is said to be on deck adds an interesting alternative--at least for the United Kingdom and Ireland markets, where it's scheduled to roll out first.

So it seems that building that perfect set-top box will be difficult. It requires many of the features you'll find on the TiVo, combined with some nice elements of the Apple TV. Even a set-top box containing Xbox 360 features would be nice. That perfect set-top box also needs to be affordable.

Right now, we just don't have it. We have multiple boxes providing all those elements, but no single box is doing it all. Will it happen soon? Your guess is as good as mine. But we can hope.

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