Content owners aren’t the ones who need to be worried about Boxee Payments, it’s the MSO (cable), satellite, and fiber networks and online distribution platforms such as iTunes, XBox Live, and (to the extent that Netflix sees itself as a platform).
The reason for this is scarcity – plain old supply and demand (most business issues can be boiled down to this). Content (film, TV, games, music, etc.) owners are well-positioned as they have the scarce good in this equation. Since The Office doesn’t have any close substitutes, it is in higher demand, and people will want to consume that content where and how it is convenient for them. This creates competition among distribution networks, driving the price of the content up. Incumbents such as the MSO’s have less and less leverage because the barriers to entry for content distribution are eroding and distribution options are proliferating. This is why Comcast has been trying to get into the content business (with its failed bid for Disney in 2004), having finally succeeded by acquiring NBC Universal last year. MSO, fiber, and satellite companies’ massive networks also require lots of capex to install ($2-3k per household to run fiber to the home), maintain, and upgrade. As a result, these companies are more vulnerable to lower-cost distribution channels such as WiMax ($20-25 per household to install; see Comcast’s investment in high-speed wireless networks in Oregon and elsewhere via Sprint/Clearwire), and online distribution platforms such as , iTunes and Netflix that disintermediate them (see Comcast’s opposition to net neutrality).
The success of iTunes has proven that people are willing to pay for content if they can legally and conveniently consume it as they wish. Boxee’s move to provide a payment platform will appeal to those preferences. It will also pressure iTunes given that Boxee has stated that it will charge less than the 30% that iTunes charges content owners. Content owners will love this as they are increasingly concerned about ‘s growing control of online distribution. Content owners will be glad to try working with an alternative to iTunes that is eager to share a greater cut of revenues. The worry for the Boxee’s of the world is that competition for content could drive their margins to commodity levels unless they are able to differentiate and deliver real value to their users and partners. It’s the same reason why Comcast is now in the content business. Boxee understands this and that is why they have a focus on design, hiring someone like Zach Klein (the guy behind Vimeo’s beautiful video player), to head product.