Boxee CEO dishes on Aereo, Apple and talks up cloud DVR

Boxee's products along with devices from similar companies like Roku have become necessary pieces of equipment for so-called cord-cutters. But now the company is courting traditional TV providers, like broadcasters and cable operators.

Boxee was among the first companies to shake up the traditional TV market by offering a product that allowed people to stream movies and TV shows from Internet services directly to the TV.

In the years since the company launched, its product has evolved from a software platform to a dedicated box that provided access to content from Netflix and other streaming partners. And most recently, the company has launched its latest product, the Boxee Cloud DVR. This device -- a rebranding of the Boxee TV that was first released in October 2012 -- allows users to record over-the-air TV and it provides unlimited cloud-based storage.

The Cloud DVR is targeted at TV broadcasters and Boxee is also looking to court paid TV providers. The device saves programs to the cloud and allows users to watch the video anywhere on any mobile device. Today it's only available in eight markets. The company is looking to expand across the country by the end of 2013.

Boxee co-founder and CEO Avner Ronen sat down with CNET at the 2013 NAB Show here this week to talk about the new cloud-based service and to offer some insight on the changing TV landscape. Ronen was also interviewed as part of a keynote presentation at NAB by Christina Warren of Mashable. Below are edited excerpts from these conversations.

Q: Boxee's product has evolved over the past couple of years. And at the end of 2012 you began offering a cloud-based DVR. What is the significance of this product?

Ronen: We wanted to integrate the traditional Boxee Box that allows you to bring your over the air TV and online TV like Netflix together on a single device with the DVR. The DVR has grown significantly over the past few years, because people want control over their own time.

There are a lot of set-top box competitors on the market today. How is Boxee different from an Xbox, Roku or Apple TV device that also gives people access to services like Netflix and Amazon?

Ronen: Our differentiator is the cloud-DVR. But today that only appeals to a niche market. It only works with people who get TV over-the-air.

So it's a great addition to an over-the-top-TV set-up. But for some people ABC, NBC, CBS, and Fox is not enough. We are also hoping to work with paid TV providers to get access to their content.

But cable and satellite TV companies have their own DVR services. Don't you think they'd see this as a competitive offering?

Ronen: When and if we are integrated with a paid TV service there will be some scenarios where we'd complement those services and some where we'd compete. The question will be whether our offering is unique, and whether it's valued enough to be included.

The advantage we provide for cable operators is that they don't have to provide a set-top box for every TV in the home. The average American has three TVs or more. That's expensive for the cable operator to deploy and maintain. If they can use our technology without having to put extra boxes out there and still use their own interface, it seems like a good deal for the paid TV operator.

How close are you to striking deals with paid TV providers?

Ronen: We've had discussions with operators, but haven't announced anything yet. We are seeing indications that the paid TV providers are interested in third party technology like this. For instance, we've seen deals between Xbox and Fios. And Time Warner is working with Samsung to allow streaming to Samsung TVs. So there does seem to be interest in the bring your own device scenario.

Is the Boxee Cloud DVR free?

Ronen: You can store up to five hours of content for free. And then for $10 a month you can store an unlimited amount of content.

What value can broadcasters get out of the Boxee Cloud DVR? After all, DVRs allow people to skip over advertising, which broadcasters, especially small local ones, rely on for revenue.

Ronen: There's no question that the DVR has disrupted Nielsen ratings and advertising in the TV business. DVRs have fundamentally changed how people watch TV.

We are not doing anything to actively enable people to skip ads. That's not the message we are sending. But even if people do fast-forward through advertising, the truth is that people with DVRs watch more TV. So overall, it increases viewership.

But people may record an entire season of a show and watch it all at once later. TV shows viewed four days after they air are not counted in Nielsen ratings, so there's no way for the broadcasters to monetize that content. With Boxee Cloud DVR, we are offering them the ability to dynamically insert Web-based advertising into those programs. So where they once couldn't monetize those shows, now they can. And with Cloud DVR broadcasters can better understand how and where people watch TV. They can then use that information to better monetize all their content.

Boxee has had its share of controversy when it first came to market. Back in 2009 Hulu, which was started by the big TV networks NBC, ABC and Fox, pulled its feed to the Boxee box. And there were other ruffled feathers among the traditional broadcasters. Today, another startup, Aereo, is stirring up trouble in the traditional TV business. What do you think of what they're doing?

Ronen: I think the product and engineering of the service is an amazing achievement. I know Chet (Kanojia, Aereo's founder and CEO) and he's a very smart guy. But the company is going after something that is very important to the broadcasters, which is their retransmission fees. And I think it will be a long battle.

In general, the Internet is a powerful new delivery model for TV content and that will meet resistance in the industry until the industry figures out a way to take advantage of it. It has happened to news and music. And now it's happening to broadcasting. The thing is that the industry would rather make that move on its own terms than being forced into it.

What do you think about News Corp's Chase Carey's threats to put Fox channels behind a paywall? Do think that could really happen?

Ronen: It's definitely something that could happen, if they believe that Aereo threatens their business. But the broadcast industry is also facing challenges in the pay TV market with Dish Network, which has its Hopper DVR that skips ads. That's another important source of revenue for broadcasters. You have to understand there is a love-hate relationship between content owners and distributors. It's a huge business worth tens of of billions of dollars a year with many players.

I think these types of issues are better resolved around the business table rather than the courts. But sometimes the courts have to step in. For example, we benefited from a court decision allowing Cablevision to offer a cloud-based DVR. The industry was trying to stop that, too.

There's been a lot of talk about Apple building its own cloud-based DVR. How will that affect Boxee?

Ronen: I'll give you the bullshit answer first. It's great if Apple comes into the market. It reinforces our vision and will bring more awareness to what we are doing.

Now here's the honest answer: Apple can suck a lot of oxygen from any space they enter. If and when that moment comes in our market, we will have to rethink some things. It could be a good thing by driving more openness of content, or like I said it could suck the oxygen out of the market toward Apple. And we'd have to fight for the remaining scraps.

Competition is good when you are winning. But it really sucks when they are beating up on you.

As a consumer I know Apple will offer a beautiful experience. But the question is whether they will deliver the content I want. I have not doubt they can crack the code on the user experience. But how do they bring the content people really want. That's true for anyone in this market. You have to bring the content. Right now, I don't know where Apple is going to come out on that.

There has been so much talk lately about TV Everywhere, which gives people the chance to watch their video content on any mobile device. But some companies seem to be restricting access of online TV shows to people, who also subscribe to a paid TV service, essentially making it harder for cord cutters. For example, Fox has extended the time frame between when it airs new shows and when those shows are available on Hulu. Is the cord-cutting dream slowly dying?

Ronen: Some companies will likely take steps back. But the trend will continue to move forward with more content coming online. It's like human rights. When you look at the arc of history, the trend has always been positive. There have been some blips along the way where we've taken a step back. But eventually we move forward. And the same is happening with Internet video.

But does this mean that I'll have to sign up for an expensive TV package to be able to get more flexibility in how and on what device I watch stuff?

Ronen: I don't think the traditional TV bundle can last. Consumers want more choice and control. And they will find a way to get it. The more content owners restrict access, the more piracy there will be.

The Internet is the best thing that could happen to the video business. It may take some time for the industry to realize the benefits. There has been a real shift in consumer behavior when it comes to viewing video. TV shows are starting to have a bigger brand than the channel or network that produces them. And new business models are emerging.

This has weakened the traditional bundles. People don't want to be forced into buying 300 channels that they don't watch. Now, I don't think the bundle is going away entirely. In fact, it could be the best value for people depending on how much they watch.

But I think there will be different packages and smaller bundles for people who want it. The Internet is great for people to create something of value, like video content, and distribute it directly to their audience without an intermediary. And what we have seen is that people are willing to pay for quality. In fact, it's an amazing time to be a creator of scripted content. And things like Kickstarter have also made it easier to fund these projects. There is more great TV today than ever before.

The reality is that the TV industry can't think that what has been will be in the future. It's not realistic. And they will have to adapt. They didn't like the idea of the DVR at first, but the truth is that even though people can skip over advertising with a DVR, they are actually watching more TV with a DVR than without.