After being an analyst for a number of years, the excitement about new products and services begins to wane. Wide eyed optimism rescinds into the shadows, rarely seeing light save for the occasional transformative technology. To me, one of those technologies is Boxee, a platform I have covered at length in the Yankee Group blogs and discussed ad infinitum in conversations with CE vendors. Boxee was one of those technologies – similar to Netflix making Watch Instantly available on the TV through Xbox, Roku, and others that would truly usher in the era of the connected home.

Everyone would win. The hardware manufacturers would have a technology they could embed to differentiate their products (if they licensed Boxee software), the content owners would get more touch points with the consumer (increasing traffic directly to ad generating revenue housed on their own portal), and consumers would finally have the opportunity to unlock broadband content from their PCS.

All was far too sunny, and now Hulu and CBS have found it necessary to pull their content (which they syndicate freely to some others, sorry TV.com) from Boxee due to the ever reliable “content owner concerns.” We should examine what the argument may be:

1. Fear of usurping broadcast. Today, Boxee is used by too few for this to be a legitimate concern of content owners. If the fear was so great that millions would flock from broadcast to Boxee, the same fear can be applied to any broadband content. Are broadcasters unwilling to put HD content online for fear a user without an HDTV but with an HD monitor foregoing broadcast to watch online – where there is less ad revenue to be made? No. To get Boxee on a TV today a user will almost definitely need either a hacked Apple TV or a PC they connect to their TV through high quality outputs. The installed base of the users doing this is so small, the fear is unfounded. What about the future? Could broadcast be impacted by broadband content one day down the road? It most certainly can and will, regardless of the moves the content owners make today. The question is do the content owners want to be a part of or excluded from the solution. What’s the next move, to sue Apple for putting DVI output on their laptop so you can watch CBS.com on your TV?

2. Concern over piracy. It seems like a simpler time when piracy was the only cited and necessary excuse for content owners to rescind content rights. But today, content owners are in a battle to thwart casual piracy. The user that uses P2P services to download the latest episode of Lost because it is free, DRM-free, and in HD. And they can also watch it on their television – if they have the technology. Those casual pirates will thrive if legitimate alternatives that generate revenue for content owners are not readily accessible, easy to use, and capable of being viewed on multiple devices. In fact, the decision to retrench, if that is what is happening here will almost certainly see a rise in piracy, and once a users turns to that parrot on their shoulder – turning them back is an arduous task.

3. Protecting dying business models. Another reason could be that content owners want to protect the need to buy DVDs. Broadband content is for the PC, DVD (or Blu-ray) for the TV, and iTunes for your iPhone. Selling the same content multiple times is a dead business model. Consumers have roundly rejected the notion of paying for the same content multiple times for multiple devices. It won’t happen.

Overall, this decision by Hulu and CBS is a major step backward for the connected home and the reality of broadband content in general. Unless Hulu is simply making a power play to flex its muscle in an attempt to negotiate certain terms from Boxee or is considering acquiring them, as MySpace did with Photbucket right before that acquisition the decision makes little sense. What will come next, NBC pulling its past seasons of The Office and 30 Rock from Netflix Watch Instantly because of fears it will cannibalize DVD sales?

As a note that not all is lost, NBC has started promoting NBC Direct again, which was available during the summer Olympics and allows users to download content with embedded advertising and watch offline, in HD. This is an important step forward and these strides should be recognized as well, but moving forward in one area and backward in another does little to propel the market forward.