Roku provides Netflix with content lifeline

by Stevie Smith - Jul 4 2008, 07:51

With major television networks and film companies progressively embracing digital distribution to enhance the delivery of their content, it’s likely that the days of conventional DVD rental are numbered. However, DVD rental heavyweight Netflix is apparently not prepared to go down without a Roku-enhanced fight.

More pointedly, Los Gatos-based Netflix joined with digital media company Roku in May of this year to produce a set-top box capable of streaming Netflix’s ‘Watch Instantly’ movie selection directly into the home, and it’s a service that is proving popular with Netflix users.

According to Forbes, initial shipments of the Roku set-top box sold out within three weeks, which duly left Saratoga-based Roku having to significantly increase production levels through its fabrication facility in Asia in order to meet rising consumer demand.

The small-form Roku device may not be much to look at (little more than a paperback-sized black box), but it grants Netflix customers to the unlimited access of DVD-quality movie content from a ‘Watch Instantly’ collection of around 10,000 titles -- and all for just a one-time fee of $100 USD (on top of the customer’s existing subscription package).

Although some may point to those 10,000 titles as only representing around 10 percent of the total movie catalogue presently available through Netflix, the increased manufacturing demand and the fact that Roku’s box costs approximately $130 USD less than Apple TV certainly help confirm the heightened customer interest.

The partnering of Netflix and Roku comes after Netflix CEO Reed Hastings outlined an industry expectation that conventional DVD rentals will peak in around 2013, which subsequently saw the company inject around $71 million USD into its own technology and development lines during 2007 -- a marked 48 percent increase over the input for 2006.

Beyond its deal with Roku, Netflix also has a broadband movie download deal in the pipeline with LG Electronics, which will see customers able to directly access high-definition movie content through an HDTV set-top box.

Similarly, there are also rumours floating around that Netflix has something in the development oven through American software corporation Microsoft’s Xbox videogame console division.

From Roku’s perspective, the set-top box manufacturer has said that its player will not remain restricted to Netflix content and will expand via a software update to include content from other major media players before the close of 2008.

The Netflix Watch Instantly service is currently supported by major movie studios such as Universal Pictures, Sony Pictures, Metro Goldwyn Mayer, 20th Century Fox, Paramount Pictures, Warner Bros., Lionsgate and New Line Cinema.

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