Is Boxee preparing for another major ‘pivot’?

Set-top box and media streaming service startup Boxee is seeking out buyers or a fresh round of funding, according to an AllThingsD report that cites unnamed sources familiar with the situation.

The company started life as a software company and eventually a set-top box maker (Boxee Box) that wanted to provide an open-source media software anyone could utilize to stream media from their TV or computer. It’s set-top box was intended as a of video codex Swiss army knife that would play pretty much any format, which was good for the nontechies that just wanted to watch their buddy’s ripped collection of sci-fi TV show DVDs using a USB drive, as well as those who wanted streaming services like Netflix, Spotify, and others.

However, the company made an unsuccessful “pivot” away from open-source development to focus on a new cloud-based DVR service to capture shows on cable and broadcast television and a new set-top box, Boxee TV (aka Boxee Cloud DVR as it’s now called). VentureBeat’s Devindra Hardawar certainly didn’t think much of it when it first went on sale last year. It looks like consumers share that sentiment despite several new features for the box.

ATD’s Peter Kafka notes that Boxee hired banking firm Allen & Co. to help it secure another $30 million or so in funding but eventually branched out to the idea of an acquisition. The New York-based company has previously raised $26.5 million in funding to date.

The shift to acquisition-mode probably had something to do with all the cable TV providers already offering their programming (both live broadcast and whatever was stored on DVR) via streaming devices. For instance, Comcast customers can now stream its Xfinity TV service through the Xbox 360, and Time Warner Cable has added live streaming channel feeds to the Roku as well as its own mobile applications and website. And when it comes to recording the freely available HD broadcast content, the biggest mover is definitely Aereo, even though its only available a handful of cities right now.

It’s kind of tragic to see Boxee’s slow death, especially because the company has done a lot of good in the early cord cutting movement — not to mention its lobbying congress for standards on how consumers can legally record broadcasted TV programming.

If Boxee is able to either secure new funding or a buyer that wants to revitalize the company, I’d expect even more drastic changes to its business model. Hopefully that includes less emphasis on a service-related products in favor of going back to its roots in enhancing the overall TV experience. For example, Boxee could shift its software development to Google TV cheerleader, with its DVR services as purely complimentary. (And lord knows Google TV could use a cheerleader.)

We’re reaching out to Boxee for further comment, and will update the post with any new information.