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Let the Games Begin

14 Nov, 2005 By: Kurt Indvik

Tuesday of next week Microsoft's Xbox 360 is hitting retail shelves, and the new video game console battle begins.

But it's more than just a battle for video game supremacy. It really is a struggle for what may really be the first mass-market home entertainment systems to make significant inroads into mainstream America.

Both Xbox 360 and Sony's PlayStation 3, set to arrive in the first quarter of next year, incorporate not just games, but movie, music and Internet access capabilities and are seen as digital entertainment Trojan horses in America's living rooms.

It's why Microsoft is putting so much marketing effort into Xbox 360, and analysts seem to think this time around Gates & Co. are going to give Sony a real run for its money. Microsoft's early jump on Sony may give it a 2 million to 3 million-unit cushion in sales before PS3 hits the market, some analysts estimate.

Closer to home, the PS3 is also Sony's first salvo—and arguably its most important—in the high def disc format battle, since PS3 will be Blu-ray Disc compatible. It may not be over-stating it to say that as PS3 goes, so goes Blu-ray. If Microsoft puts a significant dent, dare we say even match PS3 unit for unit, in the next game console wars, then suddenly Blu-ray's prospects may not shine so brightly. And Microsoft has been public in its early support of HD DVD, citing the format's support of iHD and Managed Copy as critical to allowing a more user-friendly environment for moving content around the digitally connected home.

Of course, Microsoft has a long way to go to make this a reality. Xbox has reportedly sold about 22 million units to PS3's 96 million. But Microsoft has made great strides in supporting game development for this second version of Xbox, not to mention making it a better, more powerful gaming platform. The early betting line from analysts suggest Xbox will certainly be a much stronger Trojan horse coming out of the gate than the last console race these two companies ran.

As PS3 and Xbox 360 struggle for the early home entertainment dollar and as Blu-ray and HD DVD come to market in early 2006, it seems quite clear that the next six months will be a pivotal turning point in the home entertainment and packaged media industries.

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