Reuters is reporting that Microsoft is in talks with TV networks to create a new subscription-based TV service on its Xbox gaming console that would rival efforts by Google Inc, Apple Inc and Netflix Inc.
One scenario under consideration by Microsoft is to create a new TV service on its Xbox gaming console that would establish a "virtual cable operator." The service would charge a monthly fee for access through the Xbox to networks such as ABC, NBC, Fox, CBS, ESPN or CNN, according to two sources familiar with the plans.
Other options include allowing cable subscribers to use the Xbox to watch shows with more interactive functions. Viewers could, for instance, message with friends over the console while viewing their favorite shows.
Microsoft is also exploring the possibility of creating programing packages for customers, setting up a bundle of sports or children shows, for example, these people said.
I see three reasons why Microsoft will pull this off into being a success:
One: Number of XBOX Live Subscribers
Microsoft has over 25 Million XBOX Live Subscribers (source) and with Kinect selling like Hot Cakes (source), more and more people are bound to get attracted towards XBOX leading to even more sales and more XBOX Live Subscribers. I won’t be surprised if I see 28 Million XBOX Live Subscribers mark getting breached by January. That’s more subscribers than Comcast which has 23 Million Subscribers (source). That means Microsoft is well poised to get better (read that ‘fresh’) content from Networks. Moreover XBOX Live subscribers have shown avid interest in watching TV/Movies over XBOX using services like Netflix or XBOX Live/Zune. Within the first three months of Netflix launch on XBOX 360, 1 million Xbox LIVE Gold members had downloaded and activated the Netflix LIVE application (source).
Two: Technology like Kinect and 3D TVs gaining Momentum
Motion sensing and voice controlled Kinect devices takes the gaming experience to a whole new level. It will make even more sense when Microsoft forwards this innovation and applies it somehow to the Video and Online Content. At its minimum I would be cool to play/stop/pause my Movie on XBOX by calling out without a remote. With 3D TVs gaining momentum, we can’t just imagine what all Kinect can do in this space.
Three: App Store
There are rumors of Microsoft looking to expand its Silverlight web platform to Xbox 360 (source). Silverlight is the platform on which most Windows Phone 7 Apps are developed. Wonder what will happen if Microsoft is able to bring the App Store to XBOX. Suddenly the developers of these Apps will have a new market (millions of XBOX subscribers) buying their Apps and this will only provide more incentive for them to develop cool new Apps for XBOX. Combine it with 3D TVs and you have a whole new dimension of looking at things.
Next year will be great for Microsoft consumer products and I am sure XBOX will be leading the way.