Thoughts on the Netflix box

Bringing you up to speed: Netflix announced a $99 device that hooks up to your TV and streams movies (free to Netflix subscribers) from your queue straight to your set. This is not the first “Internet set-top box” to come out, nor will it be the last. But it’s definitely one of the more interesting ones to discuss. Here are my thoughts on it, in a semi-organized manner:

What I like about it:

• Price point: under $100 is great (under $50 is perfection), especially in conjunction with free movies.
• Netflix brand extension: the company’s followers tend to be fairly loyal (I’ve heard an estimated 5-10% churn before, which isn’t too bad considering the space they are in), and have the financial resources to make a $100 box a near-no-brainer purchase.
• K.I.S.S.: the pictured remote only has a few buttons, and they aren’t making an “all in one killer box” (which would be much harder to market than a specific, focused product)
• HDMI: absolutely essential.

What I don’t like about it:

• Price point: seems like they could’ve found a way to make it free with a committed subscription. I personally pay $17.95/mo for my Netflix subscription, I have to think there’s a point ($25.95?) where I’d upgrade my service for the box. This is how the cable companies “get ya” and I think should be considered by the company.
• Roku’s brand: it’s effectively nonexistent with the masses, which is who this product is targeting. I don’t feel Netflix gains much (other than possibly having complete control over the product, a la Apple)
• It’s a box: like Thomas Hawk said, people don’t want more boxes in their living rooms.
• Competing with cable companies: Comcast offers me dozens of free HD movies per month (hundreds of SD ones), and lots of PPV content to boot. I’m concerned that for $100 I don’t really feel I get much extra, and as I state above, I now have to deal with an extra box in the mix.

Other misc thoughts:

• Initial reviews seem positive, I’m hoping to try it myself soon. I think for the box to succeed it has to be better than “easy to use”, it has to be “compelling to use”. A slam dunk would be my wife not just using it, but loving it enough to tell her friends (which was not true of VuDu, and only partially true of Moviebeam). The process of selecting movies to watch and the actual playback have to work great (think TiVo). Ditto for setup.
• According to CNET, HD content is coming soon, and I think this is a questionable move. I believe launching with HD would make a huge difference in the marketability of the box. Also, it seems that it doesn’t offer upscaling on the SD video, which means I’ll be watching content that looks less good than a standard DVD.
• I wish they had taken a page from the Apple playbook and made a more interesting/attractive product. Either that or follow the Slingbox “purple cow” approach. I totally understand the reasons for the generic gray consumer electronics product, but I feel it’s a tactical error in this case. Netflix has always stood out from the crowd, and I think their box should do the same.
• Their biggest competitive threats are, in order: nothing, a digital cable box, a DVR, a computer (media center or not), an Xbox 360, and maybe an Apple TV. I don’t really see anything else currently on the market as actually competitive.

Back in January I voiced my concerns over this exact product. I like where they’ve gotten so far, but still have a lot of concerns over market viability. I believe with some polish and evolution, combined with paying a lot of attention to early adopters’ feedback (different from beta testers!), and great marketing, they might be able to turn this into a big hit. I’ll definitely be watching!