Clicker's guide to the unlimited-channel universe

One testament to the popularity of online video is the growing number of sites that serve as Internet program guides, helping people sort through the billions of available items to find something they might like to watch. The latest, Clicker, has its official launch at 10:30 this morning (it had been conducting an invitation-only trial since mid-September). Unlike most of the other guides, which direct users to videos available on their own sites, Clicker exists to help people find programming around the Web, including such sources as Hulu, YouTube or Revision3. And it directs users to legal content only, eschewing bootlegs and snippets posted on user-generated sites in favor of full-length content from the most convenient source. The goal, said CEO Jim Lanzone, is to be "the TV Guide for the next generation of television, whatever that evolves into."

Roku multiplies [UPDATED]

Roku introduced the first set-top box for streaming Netflix movies to the TV set a year and a half ago, and the little $100 device was an instant hit -- as was Netflix's streaming service. Since then, the company has expanded the box's capabilities a bit, adding support for high-definition video and the ability to stream movies from Amazon.com and baseball games from MLB.TV. But all that appears to be table dressing for what Roku plans to do in the near future.

This morning, the company added two variations on the Roku Digital Video Player (now called the Roku HD) to the mix: an $80 standard-definition box, which is designed for smaller or older screens, and the $130 Roku HD-XR, which adds 802.11n capabilities and a USB port. The latter isn't enabled yet, but it suggests that the player will be able to support movie download services such as Roxio's CinemaNow -- a nice solution for people who want better picture quality than their broadband connections currently support. 

I've been playing with an HD-XR on loan from Roku, and like its predecessor it's a breeze to set up -- remarkably so, considering that it's a networked device. The picture quality was very good for Netflix and Amazon, although I was disappointed to find that my 5 mbps broadband connection from AT&T wasn't fast enough to handle either source's high-def streams. The most intriguing thing was the promise of a "Channel Store" where users can go to add more sources of online video. The player's start-up guide gives instructions for using the store, but it's not yet enabled. The company says it will add the store "later this fall" as an automatic update to all its units, but it provided no details about the contents.

Company executives have talked in the past about their ambition to provide a platform for all manner of online video. Unlike some other set-tops, the Roku players support Adobe's Flash video format, which Hulu and many other sources of video online use. Of course, Hulu's owners have been notoriously reluctant to support Internet-on-TV technology for fear of harming the cable TV companies that figure prominently in their business models. But there's intense interest among tech companies in providing a bridge from the Net to the TV, so it's going to happen with or without the networks' support. For example, DivX and Rovi, two software developers with broad partnerships among consumer electronics manufacturers,  also are positioning themselves to provide a platform for online video in set-tops and TVs, as are Boxee, Apple and Microsoft.

One other quick point: I fully expect telephone companies to partner with a set-top maker like Roku. Nothing made me want to upgrade to an even higher tier of DSL more than seeing the admonition on screen that I couldn't play the HD version of an Amazon movie. AT&T and Verizon might not be keenly motivated to team with Roku, given that they're trying to sell their own versions of cable TV, but there are hundreds of other smaller telcos that don't have that kind of conflict. That's fertile ground not just for video-on-demand players like Roku and ZillionTV, but also full-blown cable replacements such as Sezmi, which is expected to begin deploying in Los Angeles soon.

Updated, 10:20 p.m. Oct. 28: Roku informed me that a software bug may have prevented me from watching streams in high definition the first time I used the device. As it happens, the company was right -- having left the box on for a while, it now streams in HD (wirelessly, connected to an 802.11g router) without a flinch. And the picture quality is quite good, although my less-than-acute vision makes me a charitable audience when it comes to HD images.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow his intermittent Twitter stream: @jcahealey.

Coming soon to a PlayStation 3 near you: Netflix streaming [Updated]

Better late than never. Sony today said it will add Netflix's free video streaming service to the PlayStation 3 in November.

The announcement comes a year after Microsoft gave its Xbox Live Gold members access to the Netflix service in November 2008. That move helped turbo-charge the number of subscribers to Microsoft's online service from 14 million last year to more than 20 million today.

Jack Tretton, head of Sony's PlayStation business in the U.S., said what sets Sony's version of Netflix apart is that subscribers won't have to pay Sony any membership fees to take advantage of the service. In contrast, Xbox 360 owners who want to stream Netflix must pay a $50 annual fee for the Gold membership.

(Sony and Microsoft require users to subscribe to Netflix's movie-rental service, which costs between $5 to $29 a month.)

"We see the PlayStation 3 as the ultimate entertainment device," Tretton said in an interview.

Funny, Microsoft said the same thing about its Xbox 360 game entertainment console earlier this year.

The two companies serve up similar fare. Sony's online service, called PlayStation Network, currently has 2,300 movies and 13,800 TV shows. In November, it will add 17,000 Netflix titles to the tally. Microsoft's Xbox Live features more than 20,000 movies and TV shows, including Netflix titles. As for music, neither offers a way to buy tunes. (Xbox Live comes close, letting its Gold subscribers stream Last.fm, an Internet radio channel.)

What about Sony, which owns its own music label?

"My personal opinion is if you're going to do something, do it right," Tretton said, when asked if Sony would introduce a music service to the PS3. "Doing things right is more important than doing them first. But this would be something that would definitely be well received."

-- Alex Pham

*This post has been updated to add the number of Netflix titles Sony said it will add to its PlayStation Network in November.

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

The Hollywood plot to turn DVD renters into buyers [UPDATED]

My colleague Ben Fritz reported today that some of the major Hollywood studios are mulling a plan to raise revenue by making people wait longer to rent movies. The goal would be to boost sales by creating a short window for home video sales before titles become available for rent. The strategy wouldn't work unless the big video rental businesses cooperated, obviously, so the studios would have to buy them off by letting them buy discs at a deeper discount than they do today.

Ben's a news reporter, so he couldn't state the obvious problem with this idea. It's crazy.

I understand that the trends aren't encouraging for the studios. DVD sales are dropping, and delaying rentals might -- might -- reduce the momentum enjoyed by lower-margin rental services such as Redbox's $1-a-night kiosks and Netflix's monthly subscriptions. But the studios' plan is based on the idea that consumers are more sensitive to delay than they are to price. It's true that most of the demand for home video titles is exhausted quickly. But it's absurd to assume that buying and renting are interchangeable in consumers' minds, and that people who ordinarily might rent a title would buy it if that meant they could have it sooner. Maybe I'd see the world differently if I were on a Hollywood executive pay scale, but $3 to $5 strikes me as a much different price point than $15 to $25. Think about it. How often do people go to Blockbuster looking to rent a particular movie and, after finding all the rental copies taken, decide to buy a copy rather than rent something else? 

If Hollywood wants to encourage buying instead of renting, it has to make purchased product significantly more valuable than the rented one. This isn't a particularly easy problem to solve, given that video rental stores have access to the same discs that everyone else has. Some studios have been selling the major rental chains (presumably cheaper) versions of their movie discs stripped of the extra features, but the implication is that the missing features weren't all that compelling to start with -- otherwise, renters would demand them and the rental stores would comply. Nevertheless, the advent of connected disc players opens up a range of possibilities for the studios to provide more content and a better experience to buyers than to renters.

Such an approach would focus on generating consumer demand rather than frustrating it. In an era of expanding entertainment choices and intense competition for consumers' time and money, any move to make it harder for people to get content on the terms they prefer seems self-defeating at best.

Corrected, 1:27 p.m.: The original post said that, "with rare exceptions, there's no differentiation between the copies Blockbuster rents and the ones it sells." In fact, Blockbuster and other video chains have been buying stripped-down versions of DVDs for their rental services, as the corrected post now states.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Photo credit: Justin Sullivan / Getty Images

From the Net to the TV screen, with help from Netgear [UPDATED]

What I want most in life, aside from world peace and Jack Nicholson's Lakers tickets, is an inexpensive gadget that can bring the rich world of online video to my TV set.

Netgear's Digital Entertainer Live (aka the EVA2000) isn't that device. But it comes tantalizingly close -- close enough, perhaps, to satisfy the needs of some avid online video fans. It also brings into focus the technical and design problems that need to be solved before the living room TV can be as friendly to Internet video as the PC in the den.

The company gave a preview of the device at January's Consumer Electronics Show, positioning it as an inexpensive yet versatile link between the Web and the TV screen. By the time it started selling the EVA2000 in mid-September, however, Netgear had pared back its capabilities a bit. The box could still connect directly to YouTube and numerous other online video sites. But to access Hulu, Netflix and a handful of other popular outlets ...

Netflix awards $1-million prize to recommendation wizards, announces 2nd contest

It took three years and 40,000 teams from 186 countries, but the $1-million Netflix prize has finally been awarded. 

The competition, first launched in October 2006, asked engineers and scientists around the world to solve what might have seemed like a simple problem: improve Netflix's ability to predict what movies users would like by a modest 10%.

Credit: Paul Sakuma / Associated Press

As it turned out, it took an international brain trust led by a pair of AT&T Labs researchers nearly 36 months to reach that milestone.  The team -- called "BellKor's Pragmatic Chaos" and made up of researchers and computer scientists from the United States, Austria, Canada and Israel -- turned in the winning algorithm less than 30 minutes before the contest's deadline in July. The submission improved Netflix's existing system by 10.06%, just enough to secure the prize.

An explanation of the algorithm by AT&T said their researchers had won the contest by making advances in two technical fields of taste prediction. With "neighborhood modeling," the scientists, including Robert Bell and Chris Volinsky, improved methods for finding films that share certain characteristics. For example, the neighbors of "X2", (The sequel to "X-Men") might be "Spiderman 2" -- another comic book sequel -- or "Wolverine," which also starred Hugh Jackman; or even "Valkyrie," the latest feature film from "X2" director Bryan Singer.

The team's second approach dealt with what the researchers called "latent factors."  These are movie characteristics that are identified mathematically rather than by human evaluation.  In an article in IEEE Spectrum magazine explaining their entry, the team described latent factors this way:

Because the factors are determined automatically by algorithms, they may correspond to hard-to-describe concepts such as quirkiness, or they may not be interpretable by humans at all. ... The model may use 20 to 40 such factors to locate each movie and viewer in a multidimensional space. It then predicts a viewer’s rating of a movie according to the movie’s score on the dimensions that person cares about most.

The capacity to guess user preferences has been a major theme of both artificial intelligence and online retailing for most of this decade. In addition to Netflix, sites such as Amazon.com, Digg.com and the music site Pandora feature oft-used "recommendation engines," and heaps of other sites are in the taste-guessing business as well.

“Right now, we’re driving the Model T version of what is possible," in recommendations, said Netflix Chief Executive Reed Hastings in 2006, when the prize was launched. "We want to build a Ferrari and establishing the Netflix Prize is a first step.”

Knowing that it would take more than a 10% improvement to make a Model T into a Ferrari, Netflix  has already launched a second contest. This time entrants have been asked to predict the tastes of customers who have not taken the time to actually rate movies. Instead, the predictions will be based on demographic information -- age, gender, ZIP Code -- as well as the movies users have rented in the past.  Netflix will award $500,000 to the team that has built the best algorithm after six months, and another $500,000 after 18 months.

-- David Sarno

Baseball comes to Roku

Major League Baseball has just added another way for fans to watch games: through Roku's $99 Digital Video Player. Like an earlier deal with Boxee, the agreement enables MLB.TV subscribers to move live webcasts from their PC screens to their television sets. The only charge for Roku's baseball channel is the MLB.TV subscription fee, which is about $35 for the remainder of the current season. The Roku capability makes the league's offering more appealing to baseball junkies, albeit not a huge number of them; the Roku box isn't exactly a mainstream appliance. The bigger winner is Roku, which relies on content deals such as this one to spur sales.

Prior to MLB.TV, Roku had only two online video partners: Netflix, which offers older movies and TV shows to subscribers, and Amazon, which provides newer releases on demand on an a la carte basis. The goal for Roku (and Boxee) is to present the full panoply of online video, or at least all the major sources of programming on the Web. But some top content providers and online aggregators have been reluctant to support this "over the top" distribution model for fear of undermining the revenue the industry collects from pay-TV operators. 

Baseball has no such qualms. But then, the league charges for the privilege of watching games online, which makes MLB.TV less of a threat to the league's traditional TV-rights deals than a free online outlet would be. In other words, MLB.TV was low-hanging fruit for Roku. A larger challenge for the company is persuading ad-supported cable TV networks, such as the ones supporting Time Warner's "TV Everywhere" initiative, to come on board. 

Tim Twerdahl, Roku's vice president of consumer products, said a lot of content owners are "trying to find the right platform" for an Internet-on-TV play. "You'll see us doing more sports with other partners," he added, saying the company expects to offer at least 10 channels by the end of the year. Roku has made a development kit available to programmers who want to customize their online feeds for the Roku player (for example, by converting from a keyboard-and-mouse interface to one that uses a simple remote control). It's also working on enabling targeted advertising through the box, potentially generating more dollars per viewer than programmers can charge for the commercials they broadcast. Targeting reduces the number of viewers reached, however, so such a capability may not be much of a recruiting tool for Roku until it has a significantly larger customer base.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Netflix stock nears 10-week high on Amazon buyout rumor

Netflix Inc. shares closed at a near 10-week high today as rumors swirled that online commerce giant Amazon.com Inc. was looking to buy the 12-year-old online movie rental company. 

Netflix rose $2.12 to $42.19 with a trading volume of 4.2 million, one of the highest in months.

A Bloomberg report quoted an analyst attributing the trading activity to "renewed takeover talk" surrounding Netflix, with Amazon at the center of the conversation.

But other analysts were skeptical. 

"Adding another business that would essentially cannibalize from the moves they’re already trying to make just doesn’t make a whole lot of sense," said Steve Weinstein of Pacific Crest Securities.

"Amazon is ramping up digital distribution very quickly," he said. "They’ve obviously done a good job with e-books, and they’re making some progress with music.  So I don’t think anyone’s that much farther down the road than they are."

Neither Amazon nor Netflix would comment, saying that they don't respond to rumors and speculation.

Today's buyout rumor resembled whispers from June 2007 that spiked Netflix's stock price by 5% with one analyst predicting Netflix could fetch $1.5 billion if acquired by Amazon.

Both companies are big players in the online streaming business, where consumers can watch movies through special set-top boxes like those made by TiVo and Roku.  Amazon, which charges for each viewing, tends to have newer, more popular films available for download, while Netflix streams a more limited selection of older films to its subscribers. 

Netflix has a catalog of over 100,000 movies and television shows available by mail -- its primary delivery mechanism -- but streams only about 12,000 of those shows via its set-top software.  Amazon has made at least 40,000 movies available for streaming.

-- David Sarno

Netflix, HBO and cable bypass

The emergence of Hulu and other free sources of TV online has prompted some breathless talk about consumers dumping their cable subscriptions in favor of Internet-connected TVs. That's a nice sentiment, but cable and satellite services still have some features the streaming TV sites don't. One is high-definition programming in abundance, although that gap is closing thanks to technologies from the likes of Move Networks and Vusion. Another advantage for cable and satellite is premium channels such as HBO and Showtime, which have kept such popular series as "The Sopranos" and "Dexter" off the free sites in favor of selling episodes on DVD or iTunes.

Having said that, I still think we'll see a broadband substitute emerge for cable. It just won't be free. In fact, it may be priced a bit like cable, with tiers of premium programming offered on top of what's available without charge.

Netflix attracting more subscribers through streaming video

Netflix showed little sign of the economic slowdown that's been nailing other companies this corporate earnings season. But it attributed its fourth-quarter jump in revenue, profit and subscribers to a surprising factor: surging popularity of its online video streaming service.

The movies-by-mail service said today it added 718,000 subscribers in the fourth quarter, far more than analysts had expected, bringing its subscriber base to nearly 9.4 million. Netflix expects the number to reach 10.6 million subscribers within the next three months, even as other parts of the entertainment business contract because of the recession.

"It's very clear that streaming is energizing our growth," Netflix Chief Executive Reed Hastings said on a call today with analysts.

Hastings said the company's streaming business was propelled by connection with devices from LG Electronics, Samsung and Microsoft that offer Netflix's "Watch Instantly" service. Subscribers can use the service to stream any of about 12,000 television shows and movies without waiting for the DVD to arrive by mail. The company "substantially" increased its investment in streaming video -- and plans to do the same in 2009, he said.

"We plan to spend as much money as we can with the studios, licensing as much content as we can -- and we are already one of the studios' largest Internet revenue sources," Hastings said. "Our spending is limited only by what content is available at reasonable costs."

DVDs remain the core of the company's business, and Netflix doesn't expect ...