Xbox 360 — The Console That Unified Streaming and Cable Television?

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Xbox LiveMicrosoft (NASDAQ:MSFT) finally has released details regarding its plans to transform the Xbox 360 game console into the cable television set-top box of the future.

Rumors began swirling about Microsoft’s television ambitions in late 2010. On Sept. 15, CEO Steve Ballmer demonstrated the technology itself, using the Kinect device to voice search for shows to watch. It wasn’t until Wednesday, though, that Microsoft told the world which television companies and cable providers were signed on to provide content and access on the new service. With those in place, it’s clear that Microsoft has more than a shot at establishing a strong television business. It might very well have found a way to finally unify Internet-based streaming video businesses like Netflix (NASDAQ:NFLX) and the traditional cable/satellite television industry.

First, here’s who is on board for the new television service. Cable providers Verizon (NYSE:VZ) and Comcast (NASDAQ:CMCSA) are the first of the service providers to commit. While they won’t be providing unfettered cable access to existing subscribers, they will provide access to their respective IPTV and Xfinity services akin to what’s offered on platforms like Apple‘s (NASDAQ:AAPL) iPad. (The short version: Limited cable service access.)

Then there is the fleet of new premium and non-premium television channels that will be available, including other Comcast properties like Syfy, the science fiction television and movie channel, and Time Warner‘s (NYSE:TWX) subscription-based HBO Go service.

At first glance, the new Xbox TV service looks like more of an evolution of existing services on Microsoft’s box than something brand new. The official list of partners on Microsoft’s website is filled with video services like the Xbox version of Disney‘s (NYSE:DIS) ESPN, Netflix and AT&T‘s (NYSE:T) video service. What is remarkable, however, is the willingness of these companies to offer numerous digital services side by side with traditional television channels.

Comcast more than Time Warner and Fios seems to be the company most comfortable pursuing this new service. In addition to Syfy, the service is hosting Xbox versions of Bravo and NBC programming like The Today Show. A great deal of Comcast’s programming on these channels is already available through Netflix and the joint venture Hulu Plus — which Comcast owns alongside News Corp. (NASDAQ:NWS) and Disney — meaning that Comcast believes there is greater potential in reaching the audience by providing many options instead of restricting content to specific distribution channels.

It’s a strategy few other television providers are embracing. While it isn’t terribly different from what Comcast is doing on portable connected devices like the aforementioned iPad, it is notable since it will be on a living room-based device plugged into a family television. These are services that have the potential to, on a long enough timeline, fully supplant the traditional cable box provided by Comcast and, presumably, Verizon Fios.

As to when Time Warner will up its support of Xbox TV beyond HBO Go depends on how successful Comcast and Verizon are in quickly finding an audience. It’s likely that Time Warner wanted to provide the same mobile-style cable access as Comcast, but given the trouble TWX had with Viacom (NYSE:VIA) and others over content usage on the iPad, it’s possible the contracts are simply not in place yet.

The undisputed winner in all of this is Microsoft. Where other companies like Amazon (NASDAQ:AMZN) are busy trying to offer their own basic streaming TV services to combat Netflix and others, Microsoft has found a compelling way to unify all television content options in the living room on a device that has already sold in the millions. The final kicker? To access any of this content, users have to subscribe to the $60-per-year Xbox Live Gold subscription service.

Everyone in television should be paying close to attention to Microsoft’s plans.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/10/microsoft-xbox-tv-cable-netflix-verizon-comcast/.

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