The Web TV startup would like to raise a big investment round, or find a buyer. It has been looking for cash or an exit since February, when it hired media banker Allen & Co., according to people familiar with the company.

Boxee has raised around $30 million since 2008. Its most recent funding round was more than two years ago, when it picked up $16.5 million.

When the company first hired Allen, it was looking for another $30 million, hopefully from a strategic investor. Alternately, the company has been pitching itself as a software/hardware solution to potential buyers like cable and satellite TV providers.

You can make a case for a deal like that in broad terms: Lots of pay-TV companies are looking at new ways of getting their programming on TV sets, and some have started to do it. Comcast subscribers, for instance, can now get their TV via an app on Microsoft’s Xbox 360; earlier this year, Time Warner Cable and Roku announced a distribution deal.

And Boxee’s most recent product, a “cloud DVR” box, works along those same lines. When the company rolled it out last fall, it positioned the device as a way to store and play broadcast TV, which users could get for free with an antenna. But sales have been tepid, and the company has concluded that its only real chance for success would be via partnerships with pay TV providers, who could offer users a full compliment of programming.

Any kind of link-up with a traditional TV provider would make for an awkward press release from Boxee, since the startup, based in New York and Israel, has spent years positioning itself as a tool for cord-cutters and cord-nevers. But if you can’t beat ’em …

I think the answer is yes. And it’s especially likely when you throw Tumblr and Yahoo’s potential big mobile acquisitions into the mix.

To understand why, let’s start with the big changes in TV. If you’ve only skimmed the latest literature on where TV is headed, you’re familiar with two major trends. The first is the growth of cord-cutters: People who part ways with pay TV in favor of online and other video sources, like Hulu and Netflix. Cord-cutting numbers are heading north of a million viewers; there’s also a healthy population of cord-nevers — viewers who enter adulthood without ever getting pay TV at all.

The second major shift is in the TV experience itself. Simply put, the TV experience is growing closer to the online experience every day — between TV sets that easily integrate with social media and apps and the rise of addressable TV ads that target viewers directly, the way many online ads do.

The upshot is that we’re heading into a world where the Web and TV basically merge into a single premium video channel — or, at the very least, into two channels that overlap and interact tremendously.

Two kinds of businesses today are poised to do well in that new world:

• The current TV giants — which, if they manage things right, can keep hold of their advertiser relationships into the future of TV.
• The online companies whose businesses already closely mirror TV — and who can grow strong TV-like online ad sales businesses into bona fide next-gen TV businesses.

In that second category, Yahoo is clearly the winner.

What’s unique about Yahoo is that it’s the leader in online premium inventory — the high-value ad opportunities that reach huge audiences with a single media buy. That’s the online media inventory that’s most closely analogous to TV. And with property like its home page, long the standard as the most expensive ad unit on the Web, Yahoo seems to have gotten the process down for selling expensive inventory online. All that puts it in a great position to sell super-premium inventory like original long-form video with mass audience (a.k.a., tomorrow’s TV).

It’s also worth mentioning that, while there are decades of infrastructure behind TV buying, digital media is an unstandardized mess — making premium digital buying notoriously inefficient. If Yahoo can forge such deep agency partnerships in these chaotic early stages of premium digital advertising, think how well positioned it will be as TV infrastructure really starts taking hold in online sales.

In all of this lies a path for Yahoo to take the future of television: Leverage its current standing as the leader in premium online inventory into leadership in the next generation of TV.

That’s not to say that Yahoo is a sure-fire hit to become the next big competitor to ABC. There are definitely holes that need to get filled before that can happen. The first hole: if Yahoo wants a TV-level audience to command TV-level ad budgets, it needs the kind of content that can command massive viewership. Hulu, of course, could start to close that gap.

Second, Yahoo needs to reach a younger, cooler crowd — both as a way to entice more ad dollars and as a way to secure its future as the young cord-cutters grow up. Tumblr is definitely the beginning of a solution to that youth problem.

Third, Yahoo needs a better footing in mobile as more video viewing goes to the third screen. Tumblr has the mobile reach to become a mobile “in,” and, again, Marissa Mayer also seems to have more mobile acquisitions on the way.

And so a lot of Yahoo’s future as a leading premium network depends on Yahoo’s success at major acquisitions. Of course, Yahoo’s acquisition track record is spotty, to say the least. And while Mayer is incredibly talented at building technology, she has mixed reviews at best from major agency media buyers — the very partners she would need to help Yahoo grow from big online property to a TV-type network.

So none of this is a sure thing. But if Yahoo plays its cards right, it seems to me that a huge stake in the future of premium media is Yahoo’s game to lose.

That’s a very bright future. And it’s a lot for Marissa Mayer to work hard to not screw up.

Bill Wise is CEO of Mediaocean. You can follow him on Twitter at @billwise.

Hundreds of thousands of Americans canceled their home Internet service last year, surveys suggest, taking advantage of the proliferation of Wi-Fi hot spots and fast new wireless networks that have made Web connections on smartphones and tablets ubiquitous.

Read the rest of this post on the original site »

The reality is a lot more complicated, for a lot of reasons, but the upshot is that right now you can only watch a bit of what’s on cable on devices that aren’t your TV. And if the cable guys are going to convince people not to cut the cord, or to sign up for the cord in the first place, that’s going to have to get better.

One nice counterexample to TV Everywhere’s struggles is ESPN’s great WatchESPN app, which really does let you watch whatever you want, on just about any device, anywhere, live or on demand. That’s particularly useful for ESPN, since there are lots of cases where you can’t be in front of a TV but really do want to watch a game.

But even mighty ESPN can’t quite deliver on the TV Everywhere proposition. At left is what happened to me on Monday, when I wanted to check in on “Monday Night Football” on my phone, from my couch, at the same time we were catching up on “Homeland”* on the biggish screen.

The problem, says ESPN PR, is that Verizon has an exclusive on NFL mobile rights, so ESPN can’t deliver the game to me on my iPhone, even when I’m at home, on a Wi-Fi connection (which is the way that lots of mobile video gets consumed).**

That makes sense in a biz-dev sense, but that’s hard to explain to a sports fan who simply takes ESPN’s pitch at face value and expects to watch what they want, when they want.

And it makes even less sense to anyone who tried to do the same thing I did on Monday night, but used an iPad instead of an iPhone. Because that would have worked just fine — for whatever reason, the iPad isn’t considered a mobile device.

Again, trying to argue that some rights apply to a 9.5-inch screen but not a 3.5-inch screen is the sort of thing that makes sense to lawyers and deal-makers, and no sense at all to normal people.

You know, the people you want to keep paying for cable.

*This says a bit about what has happened to “Homeland” this season. During Season One, there was no way I was doing anything but staying glued to the set. Now I still watch it — and pay CBS for the privilege – but it’s become a one-eye program, and I don’t feel bad about checking email, Twitter, etc., while Carrie and Brody are up to their high jinks.

**This is also likely why NBC and Fox can’t deliver football via their new Dyle mobile service, even though that one relies on broadcast TV rights they should already have completely sewn up.

So, once again: Does that mean people really are ditching Comcast, Verizon and Dish, etc., in favor of Netflix, iTunes and Hulu?

And, once again: Maybe. But you can’t prove that based on last quarter’s numbers.

As we’ve pointed out before, there’s a seasonal cycle to the pay-TV business: The cable, telco and satellite guys usually add a bunch of subscribers in Q1, lose a bunch in Q2, lose a few more in Q3 and then gain some back in Q4.

Tally up the first nine months of 2012 and the pay-TV guys are basically flat — just like they have been for the past couple years, notes Bernstein Research’s Craig Moffett (click chart to enlarge):

For the past few years, the pay-TV guys could point to the cruddy economy as the reason for their nongrowth. But now that argument doesn’t work as well. Moffett: “Household formation, while still anemic, is showing signs of recovery. Pay TV industry subscriber metrics are not. Pay TV penetration of America’s households is therefore falling, even while the number of Pay TV subscribers is still inching higher.”

So, if you’re in the “everyone I know uses the Web instead of cable” camp, that sure sounds like the data supports your argument. Moffett is still unconvinced, though: He figures the net losses come from subscribers who simply can’t afford to pay for TV or the Internet, and are getting their fix from old-fashioned rabbit-ear antennas.

Plausible?

That would be DirecTV’s “Sunday Ticket” package, which gives football fans the ability to watch every single NFL game, without geographical restrictions.

Normally, Sunday Ticket is exclusive to DirecTV, and I know lots of people who get the satellite service solely so they can binge on football every Sunday.

But this year, for the second year in a row, DirecTV and Sony are letting nonsubscribers pay for Sunday Ticket, via Sony’s PS3 game console.

Sony is promoting this primarily as a way for people who already have Sunday Ticket to watch the games on their console, at no extra charge. But it’s also selling the package to nonsubscribers, for $300 — $40 less than last year.

In theory, you’re not supposed to be able to order Sunday Ticket this way unless you’re physically unable to get DirecTV, presumably because of geographical restrictions. But I’m pretty sure that, just like last year, DirecTV won’t really vet this — you just say “no” when the prompt screen asks if you’re able to receive the satellite service, pay up, and you’re on your way.

Of course, if there are lots of people taking advantage of this loophole, you’d see DirecTV shutting it down, because it’s in the the business of selling monthly pay-TV subscriptions, not a la carte football packages.

But it’s fun to imagine a world where you could do this for everything, all the time. Not holding my breath…

Update: If you don’t want to pay for football but do want to watch it legally on the Web, you’ll be able to do that as well this year — for a single game a week. NBC will once again be streaming its Sunday night games online. And, unlike the Olympics, you don’t need to be a pay-TV subscriber to watch the feed.

But if it is, the numbers don’t show it.

It’s easy to be confused about this stuff, but it’s also easy to clear it up: If you want to evaluate the state of the pay-TV business, you have to include the results from the telco guys, who have been taking share from the cable and satellite guys. And you have to look at numbers for the whole year, not a single quarter.

Once you do that, you end up with numbers that are basically flat, give or take a few thousand subscribers.

Here’s the data from the Reuters story, which uses publicly disclosed numbers from the country’s biggest pay-TV providers, who have been reporting second-quarter earnings over the last few days.

Q2 Video subscriber losses:
DirecTV: 52,000
Time Warner Cable: 169,000
Comcast: 176,000
Dish: 10,000
——————-
Total: 407,000 lost subscribers

Those numbers will likely get worse once we see results from Charter and Cablevision, who report next week. And there are still a bunch of small cable companies that aren’t public, so sussing out those numbers involves some guesswork. For argument’s sake, let’s say those companies followed the trendline of the last few years, and ended up collectively losing another 300,000 subs.

Estimated total: 700,000 lost subscribers

Still, that’s a loss, right? Yes. But as the Reuters piece itself notes, the second quarter of the year is always the worst for the pay-TV guys. College kids move away, people move into new homes, etc.

Last year, for instance, the pay-TV guys lost 442,000 subscribers in Q2. But they still ended up adding more than 200,000 subscribers by the end of 2011. That’s barely any growth at all — something like 0.2 percent — but it’s better than a loss.

This year’s trends look similar. Pay TV added 422,000 subscribers in Q1 – which means they’re basically flat for the year. If recent patterns hold, they’ll have another flat or down quarter in Q3, and then add more again in Q4.

You can argue that the pay-TV industry’s no-growth or barely-there growth is due to a weak economy and lousy household formation numbers. Or you can argue that it’s because people really are swapping out pay TV for Netflix, Apple TV, etc. Or a mix of both, or whatever.

But for now, at least, you can’t argue that the pay-TV industry is shrinking.

To recap: Lots of people you know, and lots of people who read sites like this one, think people are already ditching cable TV for some combination of iTunes/Netflix/Hulu and/or pirate sites, etc. But cable providers and cable networks say they don’t see any signs of it.

So onward to today’s numbers from Time Warner Cable, which show the second-biggest cable company in the U.S. losing 129,000 video subscribers — about 1 percent of the 11.9 million base.

If you’re in the “it is totally for real” camp, you can jump on this as proof of your thesis, and that’s what this Business Insider post* does, Grim Reaper art and all.

But in order to get really worked up about Time Warner’s losses, you’d have to ignore contrary data points from other video services that show a boost.

For instance, AT&T and Verizon each added about 200,000 subscribers to their pay-TV offerings in the last quarter. Presumably, many of those 400,000 subscribers were already paying for TV from another provider, so those losses have to show up somewhere.

Time Warner Cable notes that AT&T’s service is available in about 25 percent of Time Warner’s footprint, while Verizon, which it says was “aggressive” about marketing last quarter, is available in about 12 percent of Time Warner’s market.

In any case, until we get numbers from all of the pay TV providers, it’s hard to make any calls about cutting/adding in the last quarter. Comcast, the industry’s biggest provider, won’t report until February 15.

And once we do have all of this quarter’s data, we’re still just going to have this quarter’s data. As we’ve seen over the last year or so, sometimes pay TV user numbers go up, and sometimes they go down. We’ve yet to see a clear trend one way or another.

None of this will soothe some of you folks, who will tell me that you, or your friends, or someone you know has cut the cord and is loving life. That doesn’t mean that’s not the case — just that statistically, it has yet to register.

Earlier this month I tried to make an analogy between cord-cutters and vegans, but I’m not sure I hit the mark. So this time we’ll let Time Warner Cable CEO Glenn Britt make a similar argument, in his own words, via Seeking Alpha:

I think there are — remember, the average TV in America is on for some very large number of hours a day, with 6, 7, 8 hours a day, whatever the latest number is. And this activity you’re talking about is kind of sporadic, watching no specific programs. So most people watch a lot of TV and they like these packages of linear networks. And the services we’re talking about are not, at this point, a substitute for that. Having said that, there are people who don’t watch TV very much and they’re quite satisfied with just being able to watch a few shows now and then. And we all know one of those people and I think that affects our perception of what’s really going on in terms of the mass market.

*Per my disclosure, I not only like the guys over at Business Insider, but I have a vested interest in their success.

If you’re in the big-deal camp, then you’ll like a new survey from Deloitte, which finds that a staggering one in five U.S. residents say they have either cut the cord or are thinking about doing it. The breakdown: Nine percent of survey respondents say they’ve recently cut the cord and are getting their shows from Netflix, Hulu, iTunes, etc. And another 11 percent say they might do it. (Click image to enlarge.)

To repeat: The Deloitte survey is asking people about cutting pay TV — Comcast, Verizon, Dish, etc. Not cutting back on certain channels like HBO (that would be cord-shaving) or simply never signing up in the first place (that would be the “cord-nevers” we’ve started to hear about).

How can that possibly square with the pay-TV industry’s reported results, which show that overall subscription levels remained basically flat last year? Even if you allow for a significant margin of error, things don’t add up: If the pay-TV business had lost a single percentage point of its customers in the last year, it would be a huge deal.

But Deloitte is reporting that approximately nine million people say they’ve recently stopped paying for TV. That’s the entire population of New York, plus another million or so, vanished. Can’t be.

I’ve asked Deloitte if they’ve got any insight on the gap, but haven’t heard back. But my hunch is that — for now, at least — cord-cutters are like vegans: They’re real, and they’re out there. They’re particularly notable in certain places like New York, the Bay Area and college towns. And they over-index at certain Web gathering places, like this one. But McDonald’s sales are still chugging along.

As advertised, the free app is a mirror of HBO’s existing broadband service: It lets the channel’s subscribers stream a very deep catalog of HBO’s shows and movies, on demand, via both Wi-Fi and wireless networks.

It will also work on Apple’s iPhone and iPod Touch, as well as 20 phones running Google’s Android; it won’t work on tablets running Google’s newest Honeycomb OS, though. (Demo video from BTIG’s Rich Greenfield at the bottom of this post)

The two catches:

• The service is available to most cable customers, with the exception of Time Warner Cable and Cablevision subscribers. Time Warner Cable says it’s working on a deal; Cablevision won’t comment.
• It’s a very deep catalog–1,400 titles, including the complete run of great series like “The Sopranos” and “The Wire”–but it will still have gaps that could frustrate HBO’s most avid users. I’d like to try David Simon’s “Treme” again, for instance, but I can’t get last season’s episodes; just the new ones that started airing last week.

Some of you will bemoan the fact that you have to be a cable subscriber to get this–there’s no broadband-only option, a la Netflix and Hulu Plus. But that’s the point: Parent company Time Warner is completely wedded to the cable industry and wants to build as many incentives as it can to keep you there, too.

Still, this stuff is lightyears ahead of where the cable business was just a couple years ago, where paying subscribers had no way to get these shows except on their TVs, or by buying it again on DVD or iTunes.

And if you really are a dedicated cord-cutter, and a patient one, you may eventually get your way: I can imagine a scenario where HBO does offer this stuff directly to consumers, and if it happens within a few years, I won’t be completely shocked.

Lastest installment: A report from Disney’s ESPN, which says that just a tiny fraction–0.18 percent–of cable subscribers cut the cord in the last three months, and that that number shrank from 0.28 percent last fall.

Just as important, says ESPN: It found an equal number of “un-cutters”–broadcast TV owners who added cable and broadband access during the same period. Which means whatever loss the cable business just recorded was netted out by its new gains.

ESPN’s analysis, which it put together using Nielsen numbers, basically mirrors what it reported late last fall. Except it’s even more positive for cable guys like Comcast and Time Warner Cable–and, of course, ESPN itself.

If you’re a cynic, you might wonder what the cable network would do if the numbers didn’t support its relatively rosy outlook. Then again, if you really were a cynic, you might argue that a lot of the cable-cutting rhetoric you hear comes from cord-cutting start-ups and their backers, who have their own expensive axes to grind.

At a very first glance, some of the new rules imposed by the feds might seem like they require the new company to offer up programming to any online player that wants to pay up.

And technically, they do. But the new rules have plenty of conditions and limits. So the bottom line is you’re not much more likely to get access to “30 Rock” via YouTube, or CNBC via iTunes, then you were before.

The new FCC and DOJ rules do give, say, Google the ability to buy access to some of NBC U shows or channels. But it would require Comcast’s competitors to do the same thing, first.

That is: Unless the people who are reluctant to put their stuff online because they don’t want to upset Comcast go ahead and put their stuff online, Comcast doesn’t have to, either. So it’s theoretically possible, but not probable.

And if it happens, it will happen haltingly. If Viacom sells someone online access to its MTV lineup of reality shows, that might require Comcast to offer up its reality show lineup on Bravo. But it wouldn’t entitle an online outlet to the police procedurals on USA.

The government also gives the option to, say, Netflix, to set up shop as another cable operator, and buy access to all of NBC Universal’s programming. But it would have to buy all of it–just like Time Warner Cable and Cablevision do when they make a carriage deal for NBC U’s shows.

And again, Comcast wouldn’t have to do that unless its peers did. Which means that if Netflix really wanted to set up shop as a direct competitor of the cable guys, it can do so. But it would have to operate exactly like the cable guys, just like the satellite guys did when they entered the market a couple of decades ago.

So if Netflix, or Apple or whoever really wants to offer a full suite of cable programming, at cable prices, it could. But that would be very, very expensive: Analyst Rich Greenfield estimates that the bill for NBC U’s programming alone would run a new entrant $1 billion a year.

Just as, or even more, important, is that those kind of bundled, take-it-or-leave-it deals are exactly the kind of thing that the cord-cutting crowd complains about.

They don’t want to have to pay for USA and Bravo and Syfy and MSNBC–they want to pick and choose channels, or shows. And pay a lot less.

“I don’t think cord-cutting was a major focus” of negotiations, Comcast EVP David Cohen said during a press conference this afternoon. And that may be true!

But the net result reads very much as if Comcast wanted to make sure the government didn’t force it to break its business model. And if that was the case, it got what it wanted.

But the thing is, I need to actually converse with people when I make phone calls, and that’s often impossible using AT&T in San Francisco. The majority of mobile calls made from my apartment on my cellphone are dropped or inaudible. So you might say I should regret that decision to drop the landline when I moved earlier this year.

But because of free Gmail voice calling (which launched last August), I’m doing okay. My home Internet service (also provided by AT&T, I should say) is mostly reliable, so I just dial out of my Web browser using my laptop’s built-in speakers and microphone. The calls almost always connect and sound fine.

Google announced today that this free calling from the U.S. to anywhere in the States and Canada would be extended through all of 2011 (back in August, it said it wouldn’t charge for those calls “for at least the rest of the year”).

Since I have a Google Voice account (which isn’t required to make calls), I can also receive calls in Gmail. When I dial out, my calls look like they’re coming from my Google Voice number.

I wouldn’t mind having a cellphone that actually worked for voice calls, but for now this will continue to be my backup.

Research firm SNL Kagan says the U.S. pay-TV business lost 119,000 subscribers last quarter. That’s only the second time in history that this has happened, and the first time was the previous quarter.

And it’s important to note Kagan is talking about all pay-TV businesses, not just the cable guys. Or more accurately: The cable guys like Time Warner Cable and Comcast are losing more customers (741,000) than the satellite guys and telcos like Verizon are adding (621,000).

If you want to spin this positively for the pay-TV business, you can argue that the losses are slowing: In Q2, pay TV lost 216,000 subs.

And if you want to be a little less positive, you can argue, as the cable guys do, that if they are losing customers, it’s because the economy stinks.

Nonsense, says the cord-cutting crowd, who believes that people are starting to leave pay TV, in increasing numbers, for a combination of the Internet, rabbit ears and the likes of Netflix and Apple TV.

And Kagan is with the cord cutters here. From their release:
“It is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.”

Or in English. People are cord-cutting. It’s happening now.

But here’s the thing: There’s a valid reason for the pay-TV guys to say they don’t see what Kagan is talking about. Because they don’t. Or at least they have numbers that say otherwise.

Here’s Time Warner CEO Jeff Bewkes, who owns several very successful cable networks, speaking at an industry conference today. “The trend, as far as we can see it, continues up…it’s all good,” he told the New York Times’ David Carr. “They’re not cutting.”

And look at these numbers from cable powerhouse Viacom, whose CEO Philippe Dauman just dismissed cord-cutting talk as “much ado about nothing”. They show Viacom’s overall subscriber count, network by network, for the third quarter. And all of the domestic channels’ sub numbers, at least, have increased in the last year (click to enlarge):

So something, somewhere doesn’t add up.

So this week’s news from Time Warner Cable should have a familiar ring to it: The company lost 155,000 video subscribers, but said it couldn’t “identify any increase in cord-cutting.”

Instead, like Comcast, it said the economy was primarily to blame, as well as competition from the likes of newish video offerings from Verizon and AT&T. That is, it can’t find evidence that people are replacing cable with Hulu, Apple TV, Netflix, etc.

And, like Comcast, Time Warner Cable said that many of the video subscribers it did lose were less attractive, anyway. That’s because they were “basic” subscribers, instead of the ones who get the company’s higher-end, higher-margin offerings.

So I’m just going to lift an entire paragraph from last week’s post, and hope that at some point we’ll be able to say something new:

So we’re still stuck where we’ve been for a while: Lots of people–many of whom are the kind of people who read sites like this one–say that cord-cutting is either here or inevitable. And the incumbent cable companies say they see no sign of it.

Here’s the email that Cablevision sent to its customer base last night, explaining how they can get legal streams of the World Series delivered to their homes on the Web, via MLB.com. It’s a fancier version of the message I delivered two weeks ago, except that this time Cablevision is promising to pick up the $10 fee, too:

Is anyone going to take Cablevision up on the offer? A note from RBC Capital Markets this morning guesses that perhaps 150,000 subscribers may go for it, which would generate a $1.5 million bill for Jim Dolan and company. I’ve asked Cablevision if it can provide any numbers for the offer, which kicked off last night before Game 1 of the Series. UPDATE: “Thousands” of customers have sent in receipts for reimbursement, says a Cablevision rep.

Of course, the real risk for Cablevision isn’t the one-time payout it may have to fork over. It’s that increasing numbers of consumers learn to live without cable and get their video fix over the Web.

But that’s a risk for Fox, too: Like all of the broadcast networks, it wants the cable guys to start paying it for its programming, and if people start cord-cutting in real numbers, then the cable guys won’t have much to hand over.

Which is why it’s surprising that this rights-fee fight has lasted as long as it has–there’s no ideological difference between the two sides here, only a money gap. But the longer it remains open, the more both sides have to lose. (Disclosure: News Corp. also owns Dow Jones, which owns this Web site).