XBox One TV : Hero or Goat?

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Another Microsoft product unveiling came and went, with the boos, cat calls and derision (sometimes warranted) that accompany many things Microsoft. Somewhat without precedent, Microsoft messaged this as the Future of TV (i.e. gaming bringing known success in interactivity to TV), trying to triage two camps (TV and Gaming) that aren’t known to be mutually affectionate. Promptly, the TV crowd accused XBox One of being an erstwhile Google TV doppelganger with a somewhat awkward HDMI pass thru overlay on traditional TV. And the gaming crowd, used to being somewhat aloof from TV, didn’t appreciate playing second fiddle to TV. Not to mention, in a business where hardware horsepower is digital testosterone, Xbox One seemed like a strict subset of the PS4 (thus, Xbox One is also a PS4 doppelganger, a day late and a dollar short). Yes and yes notwithstanding, here are a few reasons to take XBox One seriously as both a TV play and a second screen play.

 

Xbox and TV.

  • It may seem like with the HDMI pass thru XBox is trying to ‘play nice’ with traditional TV the way Google TV did, but it isn’t. If XBox’es strategy is to circumscribe TV and (over time) devalue vanilla linear, HDMI pass-thru is an offensive move, not a compromise. Furthermore, it’s a clever business move from the point of view of channel partners such as National Geographic, ESPN or NFL – they can still get their traditional revenue from the traditional subset of TV, while pursuing higher risk/rewards streams (and richer analytics) around Fantasy and interactivity with a device that has the horsepower to do this really well.
  • You can take a half full or half empty view on the One announcement around harmonizing gaming and TV. The half empty school would point to a past high profile attempt involving Peter Jackson that fizzled. The half full school would point to the hire of media executive Nancy Tellem who is no stranger to unconventional+success (e.g. Survivor), and the fact that the Halo TV series is backed by Steven Spielberg. Additionally, the sale of their perfectly functional IPTV business to Ericsson would suggest that this is a high conviction bet for Microsoft.
  • Further while, gamers are a different kettle of fish than TV watchers – they influence TV watchers (as your son might influence you). If new forms of storytelling emerge, a conversion of any significant fraction of the 77 million member community would immediately move Microsoft to Tier-1. And this assumes the Xbox One community to be zero sum, which it won’t be if the content is any good.

Xbox and the Second Screen.  While XBox One wasn’t a second screen announcement, it has some pretty strong ramifications on the second screen market:

  • Firstly, it will raise the bar on what second screen competes against. It’s not tablet vs underpowered browser – it’s tablet against a kick-ass piece of hardware running rich graphics on a 70 inch screen,  3 operating systems that switch on a dime, and 3 forms of content with existing ecosystems.
  • Second – XBox One’s Snap feature blur’s the line between screens and windows. You can have two Apps on one screen (Snap mode), two windows on two screens (second screen), 3 windows on 2 screens (second screen a la Microsoft Glass + Snap), ….
  • Third – given that game developers have a culture of creating high quality derivative content (content ownership battles notwithstanding), XBox One could jumpstart a broader culture of creating second screen content (something I’ve pointed out in a different context as a barrier to second screen uptake)
  • And last but not least – just as the advent of smartphones is leading to mass-market smartphones, there could be a longer term demand equation around set-tops that incorporate some of these capabilities (e.g. casual gaming) in a lighter but more mass market fashion.

In the meanwhile, we have E3 and other upcoming shows to unveil if Halo TV is good, bad or indifferent — and of course the tea leaf reading around the XBox One ship dates.