Xbox 360 Rolling Out Entertainment Apps to Expand Video Offers, Provide 'The Future of TV'
NEW YORK – Just in time for the holiday season, Microsoft is taking the latest step toward making its Xbox 360 gaming console and its Xbox Live online entertainment service a comprehensive hub for users’ broader entertainment needs.
The company will early in the new week start to add more TV and video content to Xbox Live via new apps from a slew of entertainment partners, including HBO Go, Epix, UFC und YouTube.
In an automatic update to all Xbox 360 consoles, the company is also launching a new interface, which is comparable to interfaces on other Microsoft platforms, and adding the Kinect for Xbox 360 to the mix to bring voice and motion control to living room entertainment. Plus, Microsoft’s Bing search engine will look to make content search easy and ubiquitous – across film, TV and gaming content. For those who do not have a Kinect, text search is available.
“A revolution is happening in the living room,” Microsoft said in announcing the new Xbox 360 experience. “This holiday, in addition to offering the best blockbuster and Kinect games, Xbox 360 consoles are set to deliver live and on-demand TV shows, movies, videos, sports, music and news, becoming the best device to experience all your entertainment.”
“The vision is that the Xbox will become integral to how consumers think about TV,” said Kathy Styponias, general manager of Microsoft’s media & entertainment group, interactive entertainment business. “We are looking to provide all entertainment content you want. Games, TV, films, music, sports – all in one place.”
“We have a giant base of [often young] users who everyone wants to reach,” explained Terry Farrell, senior product manager, Xbox. “And if they are not gaming, they are buying and renting movies…Over the last 12 months, we have seen much video consumption,” and the expanded availability of TV and other content will feed this appetite.
Xbox 360’s catalog of movies, TV and music content already includes Netflix, Hulu Plus, Last.fm, Zune music and video and ESPN, among others. In October, Xbox announced that it would late in the year start rolling out new apps from about 40 TV and entertainment partners, many of them new.
Among those included in Sunday’s announcement are new apps from Google’s YouTube, HBO Go, Epix, Hulu Plus, Netflix, Lovefilm in the U.K. market, Sony’s Crackle, MSNBC.com, Syfy, TMZ, UFC, Vevo, telenovelas and sports from Univision partner Televisa, the BBC iPlayer, Comcast’s Xfinity On Demand and a previously announced live TV deal with Verizon FiOS TV. They will be rolled out in a couple of waves through early 2012.
Two new partners previously not announced are Wal-Mart’s Vudu and MLB Advanced Media.
MLB.TV subscribers will be able to access every regular season baseball game, live and on-demand, in HD picture quality with interactive functionalities. Vudu said it offers the largest library of HD content in the form of more than 45,000 blockbusters, Hollywood classics, indie films and TV shows.
Users will still need a subscription to a traditional pay TV provider or the likes of Netflix and Hulu Plus to access their respective content via the Xbox 360. But a one-time authentication is supposed to make the process seamless.
"It's a crucial strategic statement by Microsoft, but it's an evolutionary step for the larger "future of TV" debate," said Mike McGuire, analyst and research vp at Gartner about the new Xbox offers. "Xbox-Kinect elevates the whole TV-interface experience to a new level...I think content companies are going to have the opportunity to develop some very interesting content experiences on top of the Kinect/Xbox Live foundation."
Longer-term though, "any significant shifts [in content consumption] probably have less to do with technology and a whole lot more to do with the underlying pay TV business models, release windows, licensing and so on," he added.
McGuire sees the new XBox experience as putting pressure on others in the tech space.
"I think it definitely gives Microsoft an edge in the early stages of the battle for dominance in the digital living room," he said. "Microsoft's moves also certainly add to the pressure on Google to get Google TV version 2 refined and start driving some sales or chuck its heap of failed products/services."
Plus, "Nintendo and Sony obviously will feel some pain - but both of those companies have shown they can innovate and compete."
Should pay TV operators or content companies in any way be concerned that Xbox is further positioning itself as a major entertainment hub in people’s homes?
“We're looking at it as partnering with the industry and as a way to help them extend their businesses,” said Farrell. “When we bring in cable operators, they're excited about what we have and our engaged audience. Our approach is very curatorial at this point – we do some things ourselves, others with partners.”
Styponias echoed that Microsoft sees its Xbox content offers as “very complementary.”
And McGuire said forward-looking pay TV operators and online video distributors can benefit from cooperating with the Xbox team.
“By working closely with multichannel video programming distributors to deliver their content (Comcast's Xfinity, Verizon), Microsoft is filling the role of enabler - providing a platform that lets pay TV providers manage the disruption of Internet distribution in a bit more controlled environment," he said. "So, the smart MVPDs are going to invest (and are) in exploiting Kinect/Xbox.”
But at least one observer had words of caution for pay TV providers. "This is the first instance of broad access to TV Everywhere given the size of the initial [pay TV firms] and the large Xbox installed base of approximately 30 million devices, less than 50 percent of whose users currently have the required Xbox Live Gold membership," said Janney Montgomery Scott analyst Tony Wible. "This dovetails with our thesis that content will find ways to reach the consumer, threatening to commoditize [pay TV providers] as access providers."
Microsoft executives wouldn’t discuss financial terms of the new relationships with TV and entertainment firms. “We can't go into that,” Styponias said. “But there is something in it for both of us.”
One benefit for both sides is easier navigation and content discovery, she said.
To find their favorite show on the new Xbox experience via voice commands, users could, for example, simply say “Xbox. Bing" followed by the name of the show.
Alternatively, a user could do a search for Harry Potter or Star Wars – and be presented with video games, movies, TV content and music available. The search also works for favorite directors, actors and more.
Starting on Tuesday, Microsoft will also offer a free Xbox Companion app for the Windows Phone to give users the chance to find, learn more about and control content from the entertainment services on Xbox Live.
“I can figure out what to watch for movie night while my wife finishes watching a Food Network show,” explained Farrell. “And then I can turn my phone into a remote.”
What are Microsoft’s hopes for the new Xbox experience as a driver of sales this holiday season and beyond? Executives didn’t share any targets, but acknowledged they expect a benefit. Said Farrell: “Yes, we definitely see it as a purchase driver."
BMO Capital Markets analyst Edward Williams highlighted that Microsoft had its best Black Friday week ever with the sale of 960,000 Xbox 360 consoles. "The pending relaunch of the Xbox Live experience, which, among other changes, will incorporate Bing voice search to the Kinect experience and include a significant amount of additional video content, should help to keep the hardware sales momentum.