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Opinion: Microsoft Squandered Opportunity For Xbox Live TV
Opinion: Microsoft Squandered Opportunity For Xbox Live TV
October 5, 2011 | By Kyle Orland

October 5, 2011 | By Kyle Orland
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    16 comments
More: Console/PC, Business/Marketing



Since Microsoft first announced vague plans to add live TV options to its Xbox Live service at E3 this year, industry watchers have been heralding the move as a potential death-blow for standalone cable boxes, and even for separate pay TV service itself.

Those cries have only increased with Microsoft's announcement today of dozens of major partnerships with various media companies to bring video content to Microsoft's online service.

Microsoft itself is selling it as "the best way for you to interact with TV, video, movies, sports and music" and "a WHOLE LOT more enjoyable and engaging" than current TV options.

As announced today, though, Microsoft's Xbox Live TV plans seem like a squandered opportunity to extend the company's strong position in online gaming into a foothold in the burgeoning IPTV market.

Let's start with the most significant of the partnerships announced today -- those with major cable providers Verizon and Comcast. First off, it needs to be made clear that these partnerships are about providing additional hardware options to cable subscribers, not about providing additional content options to Xbox Live subscribers. Those trying to "cut the cord" and go without cable TV aren't going to suddenly get free access to anything from these cable providers through their Xbox Live subscriptions.

Even for those who subscribe to Verizon or Comcast, though, the Xbox Live partnership seems of limited value. Verizon says that its customers will have access to "a selection of popular live TV channels" through Xbox Live, implying that they'll have to return to their cable box for the full lineup of channels they subscribe to. Comcast customers, meanwhile, will get access only to previously aired content and movies offered through its On Demand service, with no live content at all.

True, Xbox Live provides functions like Kinect speech control and Bing searching that are not available on a standard cable box. But "content is king," as the saying goes, and cable customers seem unlikely to give up a good chunk of their live TV content just for a few new control and search options and the ability to get rid of a single box in their entertainment centers.

Given the half-assed implementation of the cable TV connection, it's an open question why Microsoft decided to partner with these cable providers at all. Xbox Live currently has over 35 million subscribers, more than the roughly 26 million TV customers represented by Verizon and Comcast combined as of mid-2010 (but less than the 64.7 million households nationwide with a basic cable subscription). Theoretically, Microsoft could have leveraged this position into a significant subscriber base for its own video service, signing on with individual content providers to provide live and archived video content that doesn't need an outside cable subscription.

The model here would be Amazon Prime's streaming video service, which offers subscribers a selection of over 11,000 movies and TV shows for $75/year. True, the selection is much smaller (though somewhat less expensive) than that of competitor Netflix, but that's because Amazon's service is primarily a sweetener offered on top of Prime's primary service -- free shipping for Amazon products. Similarly, an Xbox Live TV service could serve as a free (or cheap) sweetener for the already robust Xbox Live Gold service , whose primary purpose is still to play games online.

Microsoft does indeed seem to be making small moves in this direction, announcing today partnerships with a number of individual cable networks -- HBO, SyFy and Bravo -- and even individual events and shows -- UFC fights, The Today Show and TMZ -- in the U.S. Of these, however, HBO has said its HBO Go service will still require an HBO subscription (on top of an existing cable subscription), and UFC has said its coveted live fights will be available on a pay-per-view basis.

It's currently unclear precisely what content the other networks and shows will offer, and whether any of it will be made available live or for free to Xbox Live subscribers, but regardless, it seems an exceptionally small base for a viable, Xbox Live-based alternative to cable. Ditto to newly announced online video partners like YouTube, Crackle and DailyMotion, which are already available for free on PCs and an increasing number of connected TVs.

Perhaps this is just the beginning, and Microsoft intends to expand the lineup of Xbox Live video content that doesn't require an outside subscription or pay-per-view pricing. Perhaps content providers are simply unwilling to play ball, and Microsoft has been forced to use these kinds of partnerships to get any video options on the Xbox 360 at all. Regardless, as it stands now, Microsoft seems to be positioning Xbox Live as primarily just another way to get video content you subscribe to elsewhere, rather than as a way to get new video content thrown in with your gaming membership.


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Comments


Martin Crownover
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I partially agree, but I think that it's going to take a lot more time, and a large decline in subscribers, before cable companies start making better use of the web to deliver content - which will push them in directions such as this.



It's a step in the right direction though, and as an Xbox Live subscriber, I will appreciate the extended access to more content, even if I have to pay for that content. Rome wasn't built in a day, and the same can be said for the merging of television content and internet connections. We've a ways to go before big changes come along.

warren blyth
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By presenting the illusion that you can watch all tv on your Xbox, they hope to eventually drag providers into actually doing it. someday.



I agree that "signing on with individual content providers to provide live and archived video content that doesn't need an outside cable subscription" would be much better. But the decision to support established crappy cable instead - is being made my managers with their eyes on bigger pies.



The microsoft manager type sees that: if they jumped directly to original programming, they'd be mocked as sub-par in comparison to classic programming. And eventually someone else would swoop in to offer the one set-top box that does it all. better to just pretend the xbox is already doing it all. who cares if it's true, or offers real value to the customer?



in related news,

I'm completely disgusted that Microsoft expects me to pay a fee to enjoy the multiplayer half of any game I purchase. it's a disgusting hidden fee for their Game Playing System (!)

Tom Baird
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It's also important to note that Xbox could potentially be dealing with a LOT of companies that are all stubborn and reluctant of change.



The more control these companies give to Xbox now, the faster they are going to have to be completely subservient to them. If HBOs biggest provider becomes Xbox, Xbox gets heavier control over dealings with HBO. And while it may also be beneficial to HBO right now to add more features to the Xbox, why would they want to give up their current direct subscription model?



The more Comcast provides on Xbox, the more they push direct customers away from them, adding a middle man. Even if it's a short term gain for them, it could potentially be a horrible long term move.



With each of these channels muscling for a good cut, that's a lot of contributors to divide by as well, and if one contributor doesn't feel he's getting his fair share he's not going to be offering his fair share of content.

Steven Gregory
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Way to miss the point that they've turned the Xbox 360 into an iPad competitor. Which would you rather watch TV and movies on? They beat Apple to the punch with AppleTV.



Other than with an Xbox 360 please tell me how I get HBO on-demand streaming over the Internet to my TV?



It's true that Microsoft could offer a Zune Video Pass to compete with services like Netflix/Hulu/Amazon, but Netflix, Hulu +, and LoveFiLM are part of this announcement.



They're also bringing a ton of free streaming services to the US with this announcement: YouTube, DailyMotion, VEVO, Crackle, Syfy, TMZ, Bravo, ESPN, etc. Crackle in particular brings a lot of premium streaming content. Look into it.



As a FiOS TV subscriber I'm also getting live multi-channel HD streaming. You can't even do that with a FiOS cable box. And I'm getting voice search & gesture control across all of this content with Kinect. I'm also getting a very high end remote control with the upcoming Windows Phone app.

Matt Coohill
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I don't think you can sell your argument by mentioning WinPhone. There are more Apple Newtons still being used out there. :)

Bob Johnson
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You can get HBO on-demand through your laptop connected to the TV or iPad hooked up directly to TV and if enabled iPad app streamed to ATV.

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Steven Gregory
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"I'm completely disgusted that Microsoft expects me to pay a fee to enjoy the multiplayer half of any game I purchase. it's a disgusting hidden fee for their Game Playing System "



You're not paying for the multiplayer. You're paying for the exclusive xbox live arcade games, and the exclusive Call of Duty maps, etc. If you can think of a better way to get 35 million Xbox 360 users to subsidize these Xbox 360 service advancements and exclusive content then by all means. The reason why Xbox Live is destroying PSN is because of this annual service fee.

Simas Oliveira
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Well, maybe, but I pay Live Gold just for the multiplayer. Rarely get a day one demo, or buy maps, or whatever else is a benefit of being a gold subscriber. Not saying your point is wrong, they definitely are able to provide a better service and more stuff because they charge people, just making a note here that for Gold membership to be worth $60 bucks a year you have to have a need of what they offer. I don't have that need, so PSN is just fine for me at the low cost of zero. Been a 360 owner for 5 years, and PS3 owner for almost a year now. Don't plan to renew my Gold subscription. And also, I find aggravating that even though I pay for Live Gold they still feel they are entitled to greet me with a billion ads every time i turn the damn thing on. I believe everyone should be gold, but non-payers would have ads all over, and paying customers could have actual content on the dashboard. But that's not happening anytime soon, i guess.

Bob Johnson
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That is a backwards way of looking at it.



I have another deal for you.



I am going to buy exclusive rights to Cherry Coke in every gas station and vending machine in your neighborhood and then charge you a yearly fee for the rights to purchase a Cherry Coke for regular price anytime you get a craving for one.

Steven Gregory
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There are laws in place that would prevent Microsoft from becoming an IPTV provider/cable competitor. Most communities require you to open up brick and mortar service centers in every single town in order to start offering a cable TV service. Microsoft would have to open up customer service centers all over the country and employ tons of new personnel to become a cable competitor. Verizon was doing this all over the country to bring FiOS TV out nationwide. Verizon finally gave up a few years ago because the process is so cost prohibitive, so they decided to just focus on the communities they had reached with FiOS. Expansion of FiOS service has been stopped for years now. The cable companies have successfully put up significant walls to prevent any outside competition. All you can do is work with the content providers and slowly break down those walls, if you try to challenge them they will drag you into court and convince local municipalities that you are killing jobs in their community.

Evan Combs
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Um, no they wouldn't. If they wanted to lay down their own lines then yes, but if they are using an already established companies lines there is nothing preventing them from providing the service.

John Martins
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It takes me a few seconds to download an entire HD movie through Sky+, it'd take me a day through Xbox Live.

Marcus Miller
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This won't work for me. My IP has a cap on my broadband service. If I go over the cap then they start charging the business rate of $100 bucks a month.

Joe Webb
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Until MS come to an agreement with LoveFilm so I can access my pre-existing LF subscription over my £40 Live account in the same way PSN users can for FREE, I will remain doubtful about Xbox Live's ability to deliver anything bar a torrent of 12 year olds to be repeatedly shot in the face by.

Craig Page
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They really just need to offer me something under $70 a month that includes HBO, Showtime, Bravo, and AMC. So I can watch True Blood, Dexter, Breaking Bad, Boardwalk Empire, Spartacus, Game of Thrones, Curb Your Enthusiasm, and any cool new shows those networks come up with.



Any decent stuff on broadcast and basic cable channels are just cheap PG-13 copies from the good networks.


none
 
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