Lord of the Set-Tops


Microsoft’s new all-singing, all-dancing Xbox One console will be a lot of things as it strives to be the central entertainment hub of the household. But one thing it apparently won’t be is a replacement of the set-top box.

Based on Tuesday’s big “reveal” of the Xbox One, it’s clear that the device will support live pay TV services by tethering itself to MSO-supplied set-tops and gateways via a protected HDMI connection.

So, this means Microsoft isn’t taking the TiVo path by going through the trouble and pain of integrating a CableCard slot, and perhaps it’s hoping that downloadable security evolves into something that is truly nationally portable. Microsoft said “[a]t launch, Live TV will require a supported receiver device with HDMI output,” so the company appears to be leaving some wiggle room for other possible angles down the road.

But it’s abundantly clear that Microsoft thinks it can provide one box to rule them all by partnering with pay TV providers and avoid going through the tall task that Intel is chasing with a virtual MSO model.

While Microsoft's approach means more entertainment center clutter, it also shows that cable operators are becoming increasingly comfortable with letting someone else’s user interface do the driving and jumping on that wave of innovation. And based on yesterday’s tease (Microsoft didn’t offer a specific launch date other than to say it will be available around the world “later this year” or a price), the company is pouring a lot more into the Xbox One UI, with more advanced voice- and gesture-based controls that it offers with Kinect on the current generation Xbox 360, and its fresh-faced Xbox One Guide.

And even with the cable set-top serving as a sidecar and sucking up power, there’s something to like about this set-up: the HDMI integration will reduce the annoying task of toggling manually between the set-top box for live TV and the Xbox for gaming and streaming over-the-top video from sources like Netflix and Vudu. Toggling between the Xbox and the set-top manually might seem like a trivial thing, but it represents another step and a hard partition of sorts between the platforms.

Tuesday’s brief demo highlighted how this HDMI-based toggling is becoming more seamless through “instant switching,” a feature that enables the Xbox One to flip from games to music to live TV relatively instantaneously, or “as fast as changing channels on your remote.” Microsoft demonstrated how users can toggle between those apps and services just by uttering, “Go to TV” and then tuning to a speficic channel by adding, “Watch ESPN.”

The demo worked flawlessly, as they always do. Well, okay, sometimes they don’t. But this one did.

Of course, Xbox One’s approach to live TV won’t make everyone happy because it still requires a set-top box to access cable VOD services (though some on-demand fare will be offered to the console via TV Everywhere apps), the HDMI pass-through element does  represents a  step forward.

It’s not ideal, but it’s progress.

In the meantime, BTIG analyst Richard Greenfield said in his blog (registration required) that cable should play Xbox One to the hilt as it tries to reverse video subscriber losses.

Greenfield, who went to the trouble of snipping and posting the portion of the Xbox One demo that focused on the live TV piece, wrote: "Hopefully the cable industry sees the opportunity to work with Microsoft’s Xbox One (and others) to create a superior video product that begins to meaningfully recapture video market share from satellite distributors.  The opportunity is there for cable to crush satellite.”