Posted by James McQuivey on November 1, 2012
This week Wal-Mart announced that it would put significant weight behind the new Boxee TV box, a $99 set-top box that competes with the market-leading Apple TV and the runner-up Roku boxes. Wal-Mart also sells the Apple TV and Roku devices, so it might not seem like a big deal, but it is. Because Wal-Mart is going to promote Boxee TV with in-store displays and outbound marketing support. Why? Because in addition to the regular apps like Hulu, Netflix, and the rest, Boxee gives Wal-Mart customers three things they can't get from Apple or Roku:
- Regular TV shows from local broadcasters. Boxee's new box has a digital tuner that lets you tune to digital signals from ABC, CBS, CW, Fox, NBC, PBS, and Univision through either an over-the-air antenna or via ClearQAM.
- Unlimited DVR. Not only will Boxee let you watch these channels, it is offering unlimited cloud DVR for $9.99 a month (in only the top eight markets for now) to record any shows from those networks, without managing a hard drive or paying extra if you want to store hours and hours of video.
- Multidevice viewing. This is the real coup for Boxee. Because its DVR is in the cloud, it can send your recorded content to any device you log in to -- whether it's in your home or in your hands while traveling for business.
To summarize, you get the same video apps as you can get elsewhere plus all this other stuff, for the same cost as an Apple TV. Seems reasonable for Wal-Mart to get behind it, certainly. But the real aim here is for Wal-Mart to finally have a shot at pushing its Vudu on-demand service into consumer homes. It's no mistake that if you look at Boxee's website you'll see the Vudu is the first or second app shown on every page, making it seem as popular as Netflix, even though it remains far behind in consumer use.
Here's why this matters. First, Wal-Mart customers are still in play. Due to their economic profile, they are not the first people to get iPads or other more expensive devices, meaning that they are still open as to which devices, which platforms, and which video services they will lock in to. If Wal-Mart were to wait a year or two to make this push, those customers might have aligned with iTunes or Amazon On Demand, but for now, there are millions of Wal-Mart customers still open to choosing a digital video platform.
Second, this opens a new door to cord-shaving. I went on record in 2011 saying that cord-cutting would begin to matter at the end of 2012 and I stand by that assertion. But cord-cutting requires more work than it's worth for most people -- young technophiles are most likely to do it because they know how to get around many if not most obstacles to watching what they want to watch, where they want to watch. Cord-shaving, on the other hand, is not about technology sophistication, it's about money. And that is precisely where Wal-Mart's average customer sits. Sure, to take advantage of Boxee's No Limits DVR service, they'll have to pony up $10 a month. But if they can cut $20 a month from cable by dropping back to a basic cable subscription, they come out better off. Plus they have an infinite DVR service that lets them watch on the devices they're adding to their lives.
It's a perfect recipe for cord-shaving, though it only applies to people who don't care about live sports or HBO, which is where many Wal-Mart customers drop out of consideration. But you only need 5% of households to shave the cable subscription in order to cause significant woe. Can Boxee TV do that? No, not on its own. But with Wal-Mart's help? My money says yes, if they really commit to it.
Search Forrester's Blogs
Four Citizen-Driven Imperatives Governments Must Embrace »
Master Content Marketing To Drive Customer Engagement »