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Samsung acquires Boxee, intensifies competition for streamed content

With Boxee now owned by Samsung, the evidence is clear that major technology players are consolidating around so-called “over-the-top” video streaming devices as the gateway to a coming seismic shift in television.

Samsung is now competing head-on in the technology with arch rivals like Apple, Roku and Intel.

In the meantime, Boxee said it will cease support for its cloud-based DVR service, called Cloudee, effective this week.

“Joining Samsung means we will be able to work on products that marry the best hardware and software in the TV space, products that will be used by tens of millions of people and will help to shape the future of TV,” Boxee said in a customer announcement on its website.

As for Cloudee, the statement said, “We realize many of you loved the service, and we’re sorry it won’t be available moving forward.”

The transaction is estimated to be about $30 million, reported "The Marker," a technology publication based in Israel.

Samsung said the acquisition would “help us continue to improve the overall user experience across our connected devices.” The company is expected to bundle Boxee’s technology into its smart television sets and other consumer electronics devices.

Boxee, founded in 2007 and based in New York, raised $26.5 million in three rounds of funding from investors including General Catalyst Partners, Pitango Venture Capital, Softbank NY, Spark Capital and Union Square Ventures. It has 45 employees.

Avern Ronen, CEO of Boxee, will work for Samsung, as will the other Boxee staff members. Boxee began as a software application for TV-connected PCs, but the company stopped making that product last year to shift to selling a $99 set-top box with the Cloudee DVR service for $9.99 a month. The set-top box, whose sales will also cease, was manufactured by D-Link.

A new set of basic TV encryption rules handed down last year by the FCC allowed IP-based retail devices, including Boxee, to receive basic TV tiers without a CableCARD from several cable companies, including Time Warner, Cox Communications, Charter Communications, Cablevision Systems and Bright House Networks. 

The Boxee sale comes among a flurry of activity involving the IP-based competitors. Roku, with five millions units sold, announced on May 29 that it has received a $60 million investment. Two new Roku investors participated in the Series F round — the institutional investor and Hearst Corporation which is known for its diversified media and information assets. They join prior Roku investors, including British Sky Broadcasting (BSkyB) and News Corporation in the Series F round.

Apple TV, meanwhile, has added the HBO Go and WatchESPN apps and is reportedly poised to strike a TV-Everywhere deal with Time Warner Cable. Intel has said it plans to introduce a new Internet service later this year.