Is Netflix Making Blu-ray Players into Internet Set Top Boxes?
Andy Tarczon, Founding Partner
November 11, 2009
To date, the most successful Over-the-Top (OTT) video play has been the game console. With internet connectivity, video rendering, and established commerce capabilities, they have been the no-brainer platform to establish streaming to the television. Take for example Netflix on Xbox - within 12 weeks of release, more than one million consoles had downloaded and registered the software. So it was with great enthusiasm that the recent Sony PS3 and Netflix deal was received. However, while game consoles have been an easy pathway to the television (and will continue to be), this deal hints at a new wave of connectivity just now emerging ….
This past week, Netflix announced shipping of the first 100,000 PS3 integration disks. That was followed with yesterday’s blog post that all remaining requests were now shipping.
Netflix’s PS3 integration is happening not via a native software download, but utilizing disks that run in the built-in Blu-ray player. How was this done? Via a licensing deal with our friends* at RCDb. Yesterday it was announced that RCDb has licensed BD-Live software to Netflix for the PS3 Instant Streaming disc.
It is the BD-Live aspect that makes this deal so intriguing. In our soon-to-be-released report, Broadband-Enabled TV: Evolution of OTT Hardware Platforms, we forecast that Blu-ray players will account for 14% of the OTT market by 2014.
So is this Netflix / RCDb deal limited to just the PS3? For now, yes.... However, comments from RCDb’s CEO, Zane Vella, seem to indicate something more may be underway. According to Vella, “Blu-ray is now mainstream and BD-Live provides an important bridge between physical discs and premium digital content distribution.”
Despite several complaints of the application loading and movie streaming starting slowly (a bit reminiscent of when Netlfix's Xbox client launched), this is a major victory for RCDb. However, they are just one of the companies looking to leverage the Blu-ray player as an Internet set-top box (iSTB). Back in March, in a note to TDG Members, I spoke about the “rise of virtual providers” that would soon be vying for a slice of the digital delivery market. That piece highlighted Dreamer’s Biddle for Blu-ray players.
The vision for these players has been simple: buy a Blu-ray player at your local retailer and receive a free disk that enables you to use an Internet connection to access additional content from that retailer – videos, concerts, music, even games – directly on TV. In an instant, the Blu-ray player becomes a true iSTB capable of delivering a customized experience directly to the consumer. While I’ve made this retailer as service provider argument before, it has become even more poignant given last week’s Best Buy / Sonic announcement.
But such service plays will extend beyond retailers and ultimately beyond Netflix. Such plays will also provide low-cost devices that allow service providers to rapidly build services that, as Michael Greeson recently argued, “reach beyond the confines of their own TV territories and into the backyards of other cable operators.”
And both RCDb and Dreamer’s Biddle (now renamed BluTV) seem to have the right position at the right time. As Colin Dixon recently pointed out, it will be a Blu-ray Christmas as prices retail drop below $100.
For more on the emerging OTT space, be sure to join us for our free webinar “Demystifying Broadband TV” on November 17th.
*Note: We say “friends” as RCDb recently tapped Hervé Utheza, TDG Analyst Emeritus, as president. He did not, however, contribute to this article.
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