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Cable Operators

Microsoft Talks Up Xbox’s TV Game

12/12/2011 12:01 AM Eastern

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

September