In the future of television, the set-top box is king

January 10, 2013
January 10, 2013

The television industry is changing so rapidly on all fronts—hardware, software, and the content we call “TV”—that consumers are rightfully cautious about investing in any new technology that might be obsolete by next year. (3D televisions, anyone?)

And since customers paralyzed by change are not customers at all, companies are starting to offer “future-proofing” as a form of insurance against innovation. At the Consumer Electronic Show in Las Vegas on Monday, Samsung unveiled an array of feature-laden televisions that connect to the internet and perform tricks like suggesting what you should watch. Then the company said, don’t worry, if you buy one of these high-end devices, you can upgrade it next year with a “smart evolution” cartridge that plugs into the back of your TV.

But future-proofing electronics is a fool’s game. Screen quality, the most important feature of any TV, can’t really be upgraded without buying an entirely new device, and there are easier ways to keep up with the latest internet-connected apps. Samsung’s cartridge solution feels like an admission that souped-up smart TVs favored by it and other manufacturers, like Panasonic and Sony, needlessly combine excellent hardware, which people do want from their TVs, with mediocre software, which they don’t.

Even among early adopters of smart TVs in the United States, less than half have hooked them up to the internet. An analyst at NPD Group released a survey of smart TV users last month that concluded, “Internet-connected TVs are used to watch TV, and that’s about all.”

The better solution—for consumers, at least—is to divorce the two. TV manufacturers ought to dumb down their smart TVs and focus on excellent, pupil-popping displays (4K is the latest technology to get excited about) with lots of ports for plugging in other devices that handle the software and content. This is already how most people get their cable TV signal, through a set-top box, and it’s inevitable that consumers will choose to get apps like Netflix and Hulu this way, as well.

An ever-growing abundance of media can be streamed online, from network TV to HBO to Oprah Winfrey’s interview with Lance Armstrong, but there’s little consensus over how to get that video onto your television. The most straightforward approach is simply to plug a computer into the side of a TV, but most people consider that cumbersome and, in any event, don’t have a computer to spare for the cause. Then there are the baked-in offerings from Samsung and other TV makers, but they suffer from terrible user interfaces, which is probably why few people use them, and are limited by the particular apps that the manufacturer happens to provide.

Set-top boxes from the likes of Apple, Microsoft, Roku, and Boxee are the modular solution to this problem. Each has its own limitations, but they are low-priced (so it doesn’t cost so much to stay ahead of the curve), easy to use (so you might actually use them), and can easily be swapped in and out (so you can move the box from one display to the next based on your changing needs).

The point is that living-room entertainment in developed economies is reshaping so quickly—and expanding well beyond the living room—that it’s a mistake for consumers to get their streaming media from large electronics that cost $1,000 and more when they can get a broader and better experience from small devices priced to be dispensable. Roku’s latest offering is $99 and the size of a thumb drive.

Even the hotly anticipated television that Apple is said to be working on may end up following these principles of modularity and dispensability. Jeremy Allaire, chief executive of digital video company Brightcove, argues persuasively that the “iTV” will actually come in multiple parts: a high-resolution display and a set-top box similar to the existing Apple TV. The modular concept fits Apple’s strategy of allowing consumers to shift media seamlessly from one device (say, an iPad) to another (Apple TV) using a system it calls AirPlay. Microsoft’s version of the same strategy is known as SmartGlass.

Here’s a closer look at the four most viable providers of set-top boxes that will win over US consumers who want to stream media from the internet on their TVs. And, yes, the list excludes Google, which has floundered with its offering in this space, Google TV.

Apple TV

The world’s largest technology company has always called the Apple TV a “hobby,” but it was upgraded to a “beloved hobby” after consumers bought five million of the devices last fiscal year. The $99 box is undoubtedly the right choice for people who already buy media from the $12-billion-a-year iTunes economy and own other Apple devices. That allows the Apple TV’s killer feature, AirPlay, to really shine. The box also comes with Netflix, Hulu, MLBtv, and other popular apps—but not Amazon Instant Video, which is prized by some consumers.

Microsoft Xbox

You may know the Xbox as a gaming console, but nowadays, most users of the device think of it primarily as a set-top box for streaming media. It’s also the most popular video player in the United States, even beating the iPad. Xbox Live, the internet-connected side of the device, has evolved to include all the standard entertainment apps, like Netflix and Hulu, along with offerings that Apple TV doesn’t have, like Amazon and HBO Go. The major downside is price, with an Xbox 360 typically retailing around $200.

Roku

Ten-year-old Roku has long been the set-top box of choice among early adopters, who prize its flexibility. (When I dropped my cable TV subscription last year, I chose Roku for my streaming media.) Roku’s devices are among the cheapest in this category, starting at $49, and it probably offers the widest array of apps, from mainstays like Netflix and Amazon to obscure-but-neat programming from the likes of NASA and Weather Underground. And the latest addition to that lineup is ironic, given the box’s history as a cord-cutting device: Time Warner Cable announced on Monday that its app for streaming hundreds of cable channels will soon be available to its subscribers on Roku.

Boxee

Having gone through several iterations in the past few years, the Israeli-born Boxee is now positioning itself as a media player like its competitors (with Netflix but not Hulu or Amazon) with the added benefit of a tuner for watching free network TV and a DVR for recording it. The base product costs $99, but recording shows is an additional $10 a month. Boxee, which is known for a friendly user interface, may well shift strategies yet again: it’s now looking to provide the software that comes baked inside internet-connected smart TVs, which would bring this pioneering set-top box full circle.

Research contributed by Arielle Duhaime-Ross

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