Microsoft’s Xbox gaming console has long been eyed as a perfect over-the-top video vehicle. Xbox LIVE, its online entertainment portal for the Xbox 360 console, is now in 20 million homes. Compare that to Comcast, the nation’s largest cable MSO, which has close to 24 million video customers. Xbox LIVE subscriptions, which are free, give users access to Netflix videos and Microsoft’s own Zune video marketplace. Xbox LIVE users can use this console to watch thousands of movies and TV shows — today.
Now comes word Microsoft is negotiating with Disney to bring ESPN to the Xbox. Bringing sports to the growing availability of video and other entertainment services of the Xbox only add to its momentum as a potential replacement product for subscription video services. Microsoft doesn’t mince words about its intentions with the Xbox. “Our goal is, really, how can we get as much content there as possible,” says Marc Whitten, the general manager of Xbox Live to the New York Times.
Microsoft also recently announced that Mediaroom, their IPTV middleware platform, will soon be available on the Xbox (although only through AT&T U-verse, at least initially). Facebook and Twitter functionality are also available, creating, in Microsoft’s words, “the largest social network on your TV.” It all adds up to a ‘perfect storm’ of over-the-top video and entertainment capability for the Xbox. A storm that may soon generate enough momentum to catapult the Xbox into a legitimate contender to subscription video services, if it hasn’t already.
Should existing video service providers be ‘shaking in their boots?’ Not really. This is not an overnight sensation, and the existing subscription video model is in no immediate danger. But developments like Xbox LIVE should not be ignored. Quite the contrary. They should be actively observed and studied. These developments will keep existing video service providers honest – ensuring they are constantly adapting and innovating to meet the changing demands of the market. If not, Xbox LIVE and other services like it will gladly take subscribers off your hands.