« Vishy's Indian English Dictionary: godman | Main | Adobe makes huge bet on Rich Internet Applications »
November 07, 2006
XBox, a video game platform -- for videos and games
(image credit: Engadget)
This November is turning out to be a major media month for Microsoft. Today, they announced the availability of video-on-demand over their XBox Live gaming service. Starting Nov 22, customers will be able to download television and movie content from Warner, Paramount and Turner Broadcasting. Also debuting this month is Microsoft's media player Zune and its accompanying music store. Microsoft's lackluster performance in the increasingly influential arena of Web services is putting the software stalwart's feet to the fire, leaving it to examine other avenues. After the less-than-stellar performance of its media center operating system, this somewhat unexpected move is Microsoft's fresh salvo in the battle for control over the digital living room.
Earlier this year, Apple announced a device dubbed 'iTV', which would blur the line between the computer and TV by streaming Internet video into traditional home entertainment devices. Microsoft's announcement today preempts iTV by capitalizing on a foothold Microsoft already has, independent of its flagship Windows and Office products. Apple's strategy blurs the line between the computer and the TV by approaching it from the computer side. Apple's computers and devices have been increasingly resembling consumer electronics products for a while now. Fundamentally though, they have retained a relatively complex, mouse-and-keyboard driven user interface. Microsoft has upped the ante on the problem of PC-TV convergence by approaching it from the consumer electronics side. Even though Microsoft has years of expertise in traditional window-based graphical user interfaces, it has correctly picked the much simpler gaming controller as a means to bring media into the living room. This move is rather compelling from the point of view of the average consumer who is also a gamer: why go through the trouble of adding another set top box to the crowded entertainment center when one box can provide both digital video and games? Besides, what's closer to the effortless haze of channel surfing: A-B-A-A-Start or moving the mouse to a text field and typing in a search query?
This move, the first to combine video-on-demand and video games, underscores how video gaming has outgrown a small, loyal audience of consumers to become a key prong in a comprehensive media strategy. Because it is the first platform to combine video and gaming in this way, speculations on its future direction will abound. By adding video on demand capabilities to the year-old XBox, Microsoft provides a key competitive differentiator to other third-generation consoles being released this holiday season. Video-on-demand is the right add-on to the XBox because it has traditionally trounced its competitors on hardware and performance. If the video-on-demand service sees sufficient pick-up, Microsoft may further reduce the cost of the loss-leading XBox consoles and exert price pressures on its competitors. In-game advertising, which has seen but a ripple of the online advertising wave, is bound to get a fresh look from advertisers. Media houses uneasy about Apple's Disney predilection or Google's emerging dominance of advertising may be more comfortable about cutting deals with Microsoft. This platform may also be an interesting one for Yahoo! to consider, as it strives to differentiate its ad platform from Google's.
Microsoft is no doubt going to try and integrate Zune with XBox and this service in the future. Watch for the WiFi add-on to the XBox 360 become a standard feature in the console's next iteration. If only Microsoft doesn't screw up the presumed DRM scheme, the XBox could well become its next enduring vehicle for a comprehensive consumer media strategy.
Posted by Vishy at November 7, 2006 10:10 PM