Boxee: 400,000 Users, Wants to Remain Free

As part of the New York Video meetup Tuesday night, Boxee's Avner Ronen, (Founder & CEO) known and adored by AppleTV customers announced they have approximately 400,000 users. Additionally, Ronen announced Boxee plans to remain free to the end user, by collecting fees from the content providers/services. Essentially, the hope is that companies like hulu will see value in the link to video saying something like "Play now from hulu." I don't know, it seems a little iffy to me. Listing the provider's credits on the clip would seem to be the minimum needed just to use the video, let alone trying to get hulu etc. to fund it.

Big Media Sends A Message: We Don't Want Our Content To Be Too Popular Online

Unbelievable. Word is spreading quickly that hulu has requested that boxee remove hulu's programming from boxee. A quick primer for those who may not be familiar with all the players. Hulu is the official streaming site for several shows and networks. Shows are provided for free, but with short commercial interruptions. Boxee is essentially software to bring content from several sites like hulu under one interface. One of the most popular client devices for boxee is AppleTV (not Apple approved.)

In a blog entry, hulu explains that it's their content providers who have requested they remove their programming from boxee. Remember, boxee had been supplying hulu content with the blessing of hulu. This was not some sort of rogue operation. Why would the content providers not want to reach as large of an audience as possible? Boxee was not circumventing the ad serving system in hulu.

I believe on a per-viewer basis, most shows generate more revenue online than on TV. At the same time, online ads have dried up to some extent in the video space over the last few months, meaning we might be seeing a lot of freebie spots. For example, I can't imagine Blackberry bought as many video ads as you're subjected to when you watch streaming video on Comedy Central. 

Giving the content creators the benefit of the doubt, let's say the ad market is to blame for the cutback. Wouldn't the networks be better served by coming out and saying that, rather than giving the appearance of turning a cold shoulder to the online world? Or is there something else at work here? While I said they probably make more per person from online streaming than TV viewing, I think it's safe to say the $2.99 per episode from iTunes for purchased shows is the best deal going for the studios. Could it be that boxee on AppleTV was seen as a competitor to that revenue stream?

Networks, I know people keep saying that we're still trying to figure out online distribution, but that's not entirely true. Here's all there is to it: 1. Discover the way that a majority of people want to watch your content, then 2. Find a way to make money off of #1. You are no longer in control of how/when/where someone watches your shows.

Thoughts?