The Battle of the Boxes Heats Up21 Jul, 2008 By: Stephanie Prange
The other shoes finally dropped in the video game console arena at the E3 conference last week. Sony Corp. unveiled its much-anticipated and telegraphed system for digital delivery of movies and TV shows through the PlayStation 3. And Microsoft Corp. finally announced the rumored deal with Netflix to offer movies streamed through its Xbox 360.
These announcements, along with the recent Apple TV and Netflix-Roku moves, are making clearer the differing strategies to offer entertainment content through a box in the living room.
Microsoft has made no secret of its preference for digital delivery, with an executive telling Forbes that the software giant has no plans to offer a Blu-ray Disc add-on to the Xbox 360, as it did with the now-defunct HD DVD format. I guess being on the losing side of the format war has left Microsoft with a grudge against Blu-ray Disc and packaged media. However, I always suspected Microsoft's ultimate plan was to have all movies and TV shows delivered digitally through its little box, making it an entertainment gatekeeper in the living room.
The PlayStation 3 move has long been in the plans. Almost since its inception, Sony has made no secret of its scheme to make the next-generation game console an entertainment Trojan Horse in the living room, offering game, Blu-ray Disc, DVD and digital playback on one powerful box.
The ultimate outcome will come down to how consumers prefer to view movies and whether or not they care to own them. They may want some combination of the two, owning movies they really like on Blu-ray Disc or DVD and watching movies they would formally rent at the local video store on the new digital delivery services. In that case, the PlayStation 3 has a leg up on the competition. But if consumers ultimately get comfortable with storing their movie libraries digitally on hard drives or on some other server in the Internet cloud, then the Microsoft strategy will have the advantage.
What became clear last week is that two of the major game hardware companies have skin in the wider entertainment game. Undaunted by the HD DVD loss, Microsoft has bolstered its digital delivery plans. Sony, fresh off the Blu-ray win, has followed up by offering digital delivery as well.
Obviously, they are not just playing games.