Microsoft today made the long-expected announcement that it is ‘transforming TV’ by bringing the TV experience to the Xbox 360 (or, said another way, adding a ‘TV portal’ to the Xbox). My first reaction was that it was the ‘inverse’ of DISH Network’s Blockbuster Movie Pass announcement of September 23. But then, the term ‘inverse’ doesn’t really apply if there are three terms to the online video equation.
Here’s what I mean:
- Microsoft’s Xbox 360 TV initiative is ‘device-centric,’ independent of service or content provider,
- DISH’s Blockbuster Movie Pass is ‘service-centric,’ independent of content provider or device,
- Then, there’s ‘content centric,’ as in HBO GO or Max GO or WatchESPN; where the content can be just as easily delivered to an app – independent of service provider or device – as it can be to a TV set.
On the surface, ‘Xbox 360 TV’ doesn’t sound like such a big deal, but it is. On one hand, Xbox users can already get on-demand online video content through the Zune on Xbox Live marketplace, which, according to IHS Screen Digest has 16.4% market share for online movies – not to mention Hulu and Netflix.
But on the other hand, it’s live TV. This is of strategic importance for Microsoft: its ability to provide live multichannel TV instantly differentiates the Xbox 360 from other online video devices like Apple TV, Google TV, Boxee, Roku and seemingly dozens of other little boxes that have come and gone over the past couple of years.
Which brings us to DISH. Interestingly, DISH seems to have looked at their Blockbuster announcement more as a way to counter the threat of online video from Netflix, Comcast and DirecTV, when in reality, the chart that DISH published at announcement underscores – did they mean not to mention this? – what’s missing from Netflix
and Qwikster: multichannel TV itself as the differentiator.
[ Note: 5 days after this blog posting, Netflix decided to cancel Qwikster, which would have separated Netflix’ DVD rental business from its streaming business – but the point I make still remains. Just combine the two rightmost columns of this table. ]
Add in DISH’s Sling technology, Move Networks’ online video codec, the fact that DISH bought three satellite companies this year, and now owns a Telco? Hmmm…something is brewing at DISH, and I bet it will have more impact than ‘Xbox TV’
It just goes to show how much navel-gazing there is about online TV. Consider how much our industry has ruminated over OTT and cable TV cord-cutting, when in fact, the percentages (and the revenues) are still very low. The other standout stat on the chart is the fact that it underscores how many titles are not available online, compared with what’s on DVD.
The Xbox 360 gives content providers another channel to market, putting their content in front of people via a device that’s new to many of the content providers. [ Notice, by the way, that several TV programmers are going to the Xbox directly, including HBO, ESPN and SyFy. We’ll see how much leverage this gives them when it comes time for pay TV providers to renew carriage agreements with them. ]
As a set-top box substitute, the Xbox 360 stands to reduce CapEx for service providers (although AT&T, BT, Telus and other service providers have deployed using the Xbox as a set-top, and none of them are are saying how widely adopted it has been). We’ll see about that too.