Boxee launches its cloud DVR service in the San Francisco Bay Area

Boxee’s cloud DVR service is now available to San Francisco Bay Area residents, as the company turned on recording capability for its Cloud DVR set-top box for the area Wednesday. This marks the first expansion of the service since its launch in eight markets in November.

Boxee’s Cloud DVR service uses the company’s set-top box to upload live TV recordings to the cloud, which can then be streamed back to the Boxee device as well as to computers and mobile devices. The company offers its users unlimited storage for recorded shows, and is eventually going to charge $10 a month for that service once the company concludes its beta test later this year. A free limited tier will come with five hours of playback time per month.

The initial focus of Boxee’s cloud DVR is over-the-air TV, which can be received for free with an antenna — and that was apparently one of the reasons the rollout in the Bay Area took so long. Boxee VP of Marketing Andrew Kippen told me that the company already has a lot of users of its device in the Bay Area, but that it was cautious about rolling out the service because of the area’s unique geography. Via email, he told me:

“We were worried about San Francisco’s numerous hills to begin with, which is why it wasn’t one of our first 8 markets, but now feel like we have enough users there to know the product works well.”

Boxee’s expansion to the Bay Area means that the company’s DVR service is now available in a total of nine markets, including New York, Los Angeles and Chicago. Kippen told me that the company wants to be in 26 U.S. markets by the end of the year.

Boxee first introduced its cloud DVR service and device in November, and at the time still called the set-top box “Boxee TV.” However, the device was rebranded earlier this month to Cloud DVR to put a bigger emphasis on its DVR capabilities. Renaming the device just a few months after launch could be seen as a sign that Boxee is struggling to explain the offering to consumers, many of which aren’t even aware that they can receive HD TV programming over the air.

But the rebranding also suggests that Boxee is looking to work more closely with operators. The company notably toned down its cord cutting rhetoric with the relaunch, and the Boxee Cloud DVR became the first device of its class to support Comcast’s (s CMCSK) encrypted basic cable feeds. The cable operator started encrypting basic cable in some markets this month, and reached an agreement with Boxee to give the Cloud DVR access to these feeds last year.