Microsoft Talks Up Xbox’s TV Game

Game Console Makes Bid as Home-Entertainment Hub With Partners

By Todd Spangler -- Multichannel News, 12/12/2011 12:01:00 AM

Microsoft wants the Xbox 360 game console to be the only thing you need to hook up to your TV.

Of course, cable operators won’t be tossing their set-top boxes anytime soon. But Microsoft’s expanded Xbox strategy exemplifies a broader evolution of how video content is being delivered to the home — and underscores the need for the industry to adapt to the new connected-TV world.

Last week, Microsoft released what it described as the biggest upgrade to the user interface since the Xbox 360 was introduced in late 2005. The new guide supports the Xbox’s Kinect attachment, which lets users find games, movies, TV shows and music on the on Xbox Live service by saying what they’re searching for. The console also now provides an integrated top-level search via the Bing search engine.

As part of its strategy to provide a comprehensive portal for video content, Microsoft earlier this fall announced more than 40 content partners for the games platform, including Comcast, Verizon Communications’ FiOS TV service and HBO.

Now, “all your entertainment is together in one place — your games, movies, TV shows, music and sports,” Don Mattrick, president of Microsoft’s Interactive Entertainment Business unit, said in announcing the enhancements.

PARTNER QUEUE

But not everyone will be ready to play on the Xbox by the holidays. Epix, YouTube and NBC’s Today were the only new applications in the U.S. that went live when the software company released its redesigned, voice- and motion-activated user interface. They joined services already available on Xbox, including ESPN3 live sports programming, Hulu Plus and Netflix.

Verizon’s 26-channel FiOS TV lineup is scheduled to hit the Xbox later in December, along with content from NBCUniversal’s Syfy, Wal-Mart’s Vudu movie service, Crackle and Vevo. Early 2012 launches slated for the console include Comcast’s Xfinity video-ondemand service, HBO Go and MLB.TV.

Initially, just ondemand content will be searchable via Bing and Kinect. Eventually, Xbox users will be able to search live TV listings and to find programming available through FiOS TV and AT&T’s U-verse TV, Microsoft executives said. AT&T has given U-verse subscribers the option of using the Xbox as a set-top since October 2010.

A challenge for Microsoft will be to bring additional pay TV providers into the fold. They would be wise to move to such platforms quickly, Gartner analyst Mike McGuire said.

“What the smart [pay TV providers] are going to realize is, these are existential changes,” he said. “They need to be making these changes themselves, before interlopers like Netflix and others change the market for them.”

Added McGuire: “The world of the proprietary set-top box as the control anchor will be over pretty soon.”

Pay TV operators are going to start morphing from being giant superstores to being retailers inside somebody else’s mall, according to Ian Blaine, CEO of thePlatform, Comcast’s onlinevideo management subsidiary. Blaine, speaking at the Future of TV conference last month, used the metaphor to describe what the rise of connected-TV devices means for incumbent TV providers.

For Epix president CEO Mark Greenberg, the Xbox represents a key way to reach the next generation of TV viewers. “The alternative is, you turn your back on that, and somebody else becomes that provider,” he said.

Through the Xbox, Epix subscribers can select from among 3,000 movies. The premium movie service, owned by Paramount Pictures, Metro-Goldwyn-Mayer and Lionsgate, is available to more than 30 million homes nationwide through Dish Network, Charter Communications, Cox Communications, Verizon and others.

ADVERTISING PLAY

Microsoft is also using the Kinect-enabled Xbox guide to sell enhanced advertising. The company has built 100 dedicated voice- and gesture-activated portals for advertisers including Garnier Fructis. In addition, NBC’s Today and UFC will sell standard 30-second spots within their content on Xbox Live, the company said.

To access the expanded array of TV options, Xbox 360 users must subscribe to Microsoft’s Xbox Live Gold service, which costs $60 per year, and hook up the game console to a broadband connection.

Microsoft has other content partners outside the U.S., including the BBC in the U.K. and Rogers Communications in Canada. It had sold 57.6 million Xbox 360 consoles worldwide as of the end of September 2011, and moved 960,000 units during the week of this past Black Friday. The company has about 35 million Xbox Live members.

Sony Computer Entertainment, which has sold 56 million PlayStation 3s to date, offers some video content but not on the order of Xbox’s smorgasbord. Nintendo, which provides access to Netflix through its Wii consoles, has shipped 89.4 million of them worldwide since 2006.

COMING ATTRACTIONS

LAUNCH SCHEDULE FOR XBOX’S U.S. CONTENT PARTNERS:

Week of Dec. 6: Epix, YouTube, NBC’s Today

Later in December: Sony Pictures’ Crackle, Dailymotion, Clear Channel’s iHeartRadio, MSNBC.com, Syfy, Warner Bros.’s TMZ, UFC, Verizon FiOS TV, Vevo, Wal-Mart’s Vudu

Early 2012: Comcast Xfinity on Demand, Best Buy’s CinemaNow, HBO Go, MLB.TV

SOURCE: Microsoft