Q&A with Avner Ronen About Boxee’s New Live TV Feature and Why, For the First Time, It’s a Real ‘Alternative to Cable’

About a week ago, a GigaOm writer Janko Roettgers stumbled across something big: an integration that would allow anyone who

Can you hear that? The sound of a thousand cords cut.

About a week ago, a GigaOm writer Janko Roettgers stumbled across something big: an integration that would allow anyone who owns a Boxee Box to watch live broadcast TV over the device without having to switch back-and-forth between inputs.

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Now, Boxee is finally prepared to speak about the feature. In January, the company will start selling a USB dongle that transforms the antenna on the Boxee Box into a tuner to capture free over-the-air HD TV signals from channels like ABC, CBS, Fox, and NBC. The dongle is a one-time cost of $49 and the company is currently taking pre-orders.

So that’s a little more expensive than your typical digital converter box, which also lets you get free live broadcast TV. But you get some special social juice with Boxee, plus everything in one unit with one remote control.

Betabeat spoke to Boxee founder and CEO Avner Ronen yesterday about why he thinks this could be a tipping point in getting consumers to cut–or at least shave–the cord.

We were talking to David Tisch, one of your angel investors about it, and he thinks it will increase the value to the user exponentially. In an email he called it a “true cable alternative,” when combined with the content that’s already available on Boxee.

The way we see it, for many people, over-the-top video services like Netflix (NFLX), Hulu, iTunes, VUDU and YouTube are filling a bigger role in the way people consume video. But there’s still a big piece missing. You want to watch local news or a football game or the Oscars or the Olympics or the Presidential address—whatever it is that’s delivered in live broadcast. But if you want to do that today over the Internet, over-the-top is sometimes impossible and other times very hard. So if somebody considers cutting the cord, it will be a big missing piece for him.

Are there people who won’t be appeased with this add-on?

If you live by ESPN and you have to watch every game of the Knicks and the Yankees then, you know, Boxee Live TV would not be sufficient. But if you’re a casual sports fan—you watch the Superbowl and you watch the World Series and you watch the Olympics and you watch the U.S. Open—all of those things are on broadcast. 89 of the top 100 shows—all in broadcast. So there’s a critical mass of content that we believe will provide an alternative to—not 100 percent of households—but we hope we can make something that is attractive to maybe half of the U.S. households.

You consider this a turning point for Boxee?

For us it’s the first time I think that we can talk with users about Boxee as an alternative to cable and being able to answer their most basic questions, which are: Can I watch this game? How do I watch the news? That’s where most people are saying, I don’t think I’m ready yet. If we can get people to make a list of the stuff they watch and then see what’s available for free over the air, and then what’s available for them over-the-top, and then see what’s left on that list and then ask themselves if what’s left is worth $85 a month? I think many people that go through that exercise of making that list come to the conclusion that they are ready to cut the cord.

With a live TV component, do you see yourself going up against Google (GOOGL) TV?

No, Google TV has said many times that they don’t see themselves as an alternative to cable, but rather something that compliments cable. If you look at the [Google TV] box and what it does if you want to access live TV, you actually have to connect the cable box. They’re taking a different approach. We think that users just live a different life right now when it comes to the way they watch TV and that cable has lost touch with the way they consume TV. When they sit down to watch something, they don’t just open the TV and start to channel surf. I think that behavior is gone.

So it seems out-of-touch to tether your product to cable?

Like users revolted when they had to pay for 15 songs if they wanted to get two songs—the way music was delivered—I think that the same sentiment is now happening with cable TV. You don’t want to pay $80 a month for hundreds of channels that you don’t really watch. It’s not that you’re not willing to pay for the stuff you want to watch. That’s exactly it. You want to have more control over what you’re paying for.

Do you expect pushback from networks? Have you been in discussions with them?

We’re talking with media companies all the time. I think by now most of them know we’re coming up with Boxee Live TV. On its own, it’s not something new. Broadcast TV has been around before cable TV was there. It’s kind of a forgotten history. People don’t know that they can get this stuff on the air and they can get it on HD and for free. We’d like to remind people that it exists. The media companies, definitely those that own those broadcast channels and cable channels, they’ve been working really hard to generate dual revenue streams. Both advertising and subscription.

So it won’t be the Hulu scenario, where it shut itself off from Boxee. They can’t make it so that the dongle won’t work?

No, they’re required by law to make it available.

Where do see the networks finding additional revenue?

There’s an opportunity media companies have beyond the advertising revenue to start generating new types of subscription services, which I think that the initial phase of it you can see with Glenn Beck doing his own subscription show and Louis C.K. doing a pay-per-view event. Those are shows and content that’s more on the margins. When you talk about 89 of the top 100 shows that are broadcast, you have to imagine that if media companies would start offering premium services around that content that there’s gonna be some traction for it with consumers. If you look at over-the-top, that’s not an environment where people are not paying. Between iTunes and Xbox Live and PS3 and services such as Boxee all of whom have credit cards on file and can make a very quick decision to purchase one time payment or a subscription. The users dissatisfaction is not with content, it’s with the cable companies.

That’s why it makes sense for Boxee to separate working with the broadcast networks versus the cable companies, who are going to fight this until they die. But how do you know the tuner will work?

We tested it in different places. During December we’re going to get it into the hands of early users as well. So we’ll get feedback from consumers. We’re very optimistic. If you don’t have a great reception where you live, you can actually call your cable company and ask for what’s called basic cable. It’s the unencrypted channels—CBS, Fox, NBC, the same channels—you can get them over the coaxial cable and connect that to the Boxee Live TV tuner, so we support that as well. It may be a bit difficult for the consumer, because you’ll get pushed to buy a higher tier package or get some sort of bundle. They don’t really advertise that you can get those channels for a low fee.  You can shave the cord rather than cut the cord.

Have you envisioned something like this for awhile?

Yeah, it’s been in the works since the beginning of the year. I cut the cord—stopped paying for cable—about five years ago. That’s what actually prompted me to start Boxee, was when I decided I’m not watching cable enough to justify paying for it. Three years ago, I started playing with different antennae and that has been my set up at home for awhile. I’m using Boxee for over-the-top. I have a 7-year-old kid and we watch football together and we watch tennis together and we do it over the antenna. But we had to switch inputs every time we did it. That just didn’t make sense. That’s what pushed us to bring those two together. Even for myself, the first time I didn’t have to switch inputs, it immediately made a big difference.

What about social features with the Live TV add-on?

We’re adding a little Boxee-ness to it. You’ll be able to see how many people are watching a channel right now. And you’ll be able to see if your friends are watching a show right now. We’ll do more of that. We’ll integrate social and we’ll integrate additional data to enhance the viewing experience.

Can you use it like TV and store something from network TV?

Not in the initial release. The driver for us was live broadcast. We were watching stuff on Netflix and VUDU and Hulu. But if we hear the feedback from users that they really want us to do DVR, we have another USB port, people are using it to connect storage space already, I guess we can do a software upgrade and enable them to record.

What did you make of Logitech talking about the money they had lost with Google TV? Do you think set back web TV?

At this time, it’s not gonna be a big revelation that the initial version of Google TV did not live up to either their expectation, or more importantly user expectations. It’s a tough problem to solve for the consumer. Logitech made a bet on Google and took a big financial risk in terms of manufacturing, inventory, and then a big advertising campaign around it. A very big presence in retail stores trying to explain Google TV to consumers that are walking into the stores. But all that effort eventually didn’t pan out, obviously. There was no viral effect. Same goes for Apple TV, by the way, the initial version didn’t do extremely well, even though it’s Apple. Second generation Boxee is doing, I think, much better and is more attractively priced.

I think we’re all still working at it and solving the problem for the user and trying to find the right mix in terms of features and simplicity and price point and content. I don’t think anybody has completely nailed it. Until now.

You think explaining this to people is the biggest barrier?

I think as an industry we need to a better job simplifying the product. The cable TV experience is not broken. They love the content. They may be upset with how much they pay compared with how much they watch. This is something we’re trying to address, but the experience for many people works. To be able to turn on the TV, to watch something, record something, that works. So for you to come and replace it, you have to come up with something that provides the users with the content and then the experience is still, I think, a challenge for us all.

Q&A with Avner Ronen About Boxee’s New Live TV Feature and Why, For the First Time, It’s a Real ‘Alternative to Cable’