The Xbox could rule the living room with bundled internet access

Since I questioned Microsoft’s change in marketing strategy for the Xbox, I’ve been thinking about positive suggestions for boosting the market share of the Xbox 360. And I think I’ve got a good one, although it might be bit odd – as always I’m hoping your comments will aid my thinking.

The idea came to me as:

Microsoft’s Xbox 360 is a major attempt to ‘own the living room’ with a device which converges gaming (especially online gaming), videos, and other entertainement and community building.

Xbox Controller by A_Hermida on Flickr (CC Licence)

Xbox Controller by A_Hermida on Flickr (CC Licence)

The Xbox Live service is a major selling point for the Xbox.

Videos on Demand were one step towards convergence.

Then integrating with Netflix was the next step to boost the pretty measly catalogue of videos on demand. (Sadly still unavailable in the UK).

US broadband suppliers are starting to limit data. Meanwhile in the UK, far lower limits are normal. In fact, one major reason for my decision to go with Zen Broadband was that they offered a decent data limit for 2-8Mb connections, unlike most other ISPs (It’s the maximum speed I can get in my area). But even with a 20GB limit, I’m getting closer and closer to hitting the data limit every month, as more and more of my media usage is online.

So why doesn’t Microsoft bundle internet access with the Xbox 360/Xbox Live accounts?

There may be issues around conflicts of interest etc, but if Microsoft wants to own the living room, particularly outside the U.S, then perhaps becoming an ISP, or partnering with an existing supplier might be the best move they could ever make.

1. If they offered the highest data limits in the market, they’d give an added incentive for families to pick the Xbox.

2. Increased data limits would encourage the download/renting of full films online – as it is, a handful of films would mean no more internet for a month for me.

3. They could ensure maximum compatability, and also work to reduce issues with lag and connections. There are still many issues with online gaming, especially given the speed differences between U.S and U.K for example.

4. They’d be in a position to stimulate broadband improvements, and drive down prices by subsidising the costs with the increase in revenue from an uptake in sales, Live Accounts, and VoD. Plus it may stimulate more innovation in the services being offered. And they’d also be able to benefit from offering services from the entire Microsoft business to families which are likely to have other internet-enabled devices alongside their Xbox.

5. It gives an added incentive for people currently using/considering a PC as a media centre to use the Xbox instead.

It seems to make sense, but in my enthusiasm I may have missed some reasons why this would be difficult/impossible – so please do help improve my thinking through the comments.  Maybe we’ll end up with better broadband because of it!

Comments

  1. It’s a fair point especially if you consider the pairing with Vista or Windows 7 as a media centre and the Windows Home Server options.

    Customers can buy in at a base pack, full house networked system with storage and auto back ups and combine it with online cloud storage, Messenger, Video Chat and possibly simple Office offering.

    However, the telcos need to protect the bandwidth and infrastructure they have licensed means no-one would give Microsoft a full run at it alone – it would need to be with strategic partners to deliver the “to the home service” which would mean another layer of risk in terms of customer service and another layer of costs for the preferential treatment. Indeed this would likely push ISPs to prioritise all Microsoft services to distinguish it from the base offering which would likely mean a hefty price premium and be the first commercial justification to have a non-neutral net delivery.

    think Sky vs terrestrial when satellite launched in the 80’s, you could have the latest movies and big budget shows but only a tiny fraction of the audience could justify the base and very few would benefit from the full price service.

    i see the sense in terms of plug and play, family friendly no-mess appliance in a box solution. But on the current business models of the players i am sure this would be their dream but a consumers nightmare.

    plus.. how noisy would it be in the living room? – my biggest issue with the two 360 media extenders i have, ignoring the energy efficiency of running a dual core pc in a consumer box with a equally hungry video card.

  2. It’s a fair point especially if you consider the pairing with Vista or Windows 7 as a media centre and the Windows Home Server options.

    Customers can buy in at a base pack, full house networked system with storage and auto back ups and combine it with online cloud storage, Messenger, Video Chat and possibly simple Office offering.

    However, the telcos need to protect the bandwidth and infrastructure they have licensed means no-one would give Microsoft a full run at it alone – it would need to be with strategic partners to deliver the “to the home service” which would mean another layer of risk in terms of customer service and another layer of costs for the preferential treatment. Indeed this would likely push ISPs to prioritise all Microsoft services to distinguish it from the base offering which would likely mean a hefty price premium and be the first commercial justification to have a non-neutral net delivery.

    think Sky vs terrestrial when satellite launched in the 80’s, you could have the latest movies and big budget shows but only a tiny fraction of the audience could justify the base and very few would benefit from the full price service.

    i see the sense in terms of plug and play, family friendly no-mess appliance in a box solution. But on the current business models of the players i am sure this would be their dream but a consumers nightmare.

    plus.. how noisy would it be in the living room? – my biggest issue with the two 360 media extenders i have, ignoring the energy efficiency of running a dual core pc in a consumer box with a equally hungry video card.

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