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Microsoft and Comcast recently announced that Xbox Live users will now be able to stream on-demand Comcast Xfinity content through their gaming consoles. It’s been insinuated by some that Microsoft is making some form of payment to Comcast for the deal.

This doesn’t seem outlandish. The 20 million paying Xbox Live users (out of 66 million Xbox 360 units sold) now spend slightly more time streaming content than they do playing video games. Microsoft will keep stoking this trend, pushing its hardware further into the profitable mainstream of entertainment content consumption.

But, will the Xbox grow up to become a more dominant mode of delivery?

Getting into the living room has been a priority for Microsoft since it’s acquisition of WebTV in 1997. That product, which attempted to establish an entirely new category, never took off. Gaming consoles, however, were popular, and Microsoft has been able to piggyback into the living room using that form factor. To ensure that the Xbox would break into the market, the hardware in 2002 was superior to Sony and Nintendo’s products, and was sold at a loss.

Microsoft has a significant head start on Apple, and any of the other big tech competitors like Google who want to move into the living room. Even though it’s selling more briskly than it was several years ago, AppleTV is still referred to by the company as a “hobby.”  As for Google, large hardware partners of Google TV have abandoned the technology as a failure while Google readies a new tablet.

Microsoft’s ownership of Skype, and history of successful partnerships with Facebook, indicate that the company has a potential to powerfully and deeply integrate the (currently) most popular social nexuses with its hardware. If Windows 8 and the partnership with Nokia takes off (i.e. they can create a must-have device and content network that is more attractive than Apple’s), it could trigger a big shakeup in tech. An integrated digital environment that spans multiple form factors (laptop, phone, tablet) is coming. But at present it still seems unlikely that Microsoft will be the one to create it.

Are we ready for connected TVs?

The living room may not be changing along the trajectory that Microsoft and its content partner Comcast are anticipating. First of all, the Xbox is a gaming console, and is purchased as such. While Microsoft is no doubt deeply pleased that entertainment streaming through its box is taking off, the fact remains that only ~30% of the console’s owners bother to connect it to the Internet.

While not abysmal, Microsoft’s numbers are a little boring. If this product is the future, why are people so unexcited about it? They have the hardware – why won’t they connect? Jeremy Toeman recently tried to parse this same question in the Guardian with regards to Connected TVs, which have a low connection rate of 15-20%:

Other than Netflix, there isn't a strong consumer-facing value proposition for any of the smart TVs today. … It remains highly unclear as to why things like Facebook and Twitter even belong on or anywhere near a TV. As a second screen (mobile, tablet, laptop) experience, sure, but on my television screen? I've yet to meet someone outside of Silicon Valley who thinks seeing a Facebook feed scroll down the side of their living room TV set sounds like entertainment. 

The reason that the Xbox Live usage won’t take off in a bigger way is similar to the reason that Connected TV’s aren’t being connected: people still buy TV’s to watch TV, and they buy gaming consoles to play games. Presumably, most everyone who’s buying a Connectable TV or an Xbox 360 also has the other digital gadgets that provide far better Internet experiences.

Multiscreen viewing is on the up

It’s the “other gadgets” that are successfully encroaching upon the TV/Console model, not the reverse. TV viewing is down for the 12-34 year old age bracket. Internet consumption is up, and time spent on the Internet occurs concurrently with TV viewing. 43% of iPad users claim to watch TV and surf the Internet simultaneously “all” or “most” of the time. It’s estimated that by 2014 there will be 61 million iPad owners in the US – 19% of the population.

Multiscreen viewing is popular right now amongst first adopters because the experience of watching television, while interesting, isn’t as captivating as the Internet. Television networks have tried to spin multi-screen viewing as positive –viewers can interact with ads and buy things on the spot! But the truth is probably that most of the time viewers are looking at a smaller screen because they’re bored with what’s on the big one – and they’re not accustomed to being bored.

Can TV ever replicate the hypermedia experience?

The Internet works because of hypertext – links that endlessly connect pages together. Because of hypertext, web viewers can explore knowledge nonlinearly. Hypermedia is the seamless combination of text, images, audio, and video. The Internet as we experience it today is hypermedia: an endless sea of on-demand content that maintains a state of continuous engagement. This experience is superior to any other atomised content consumption modes, and it's what we've come to expect. 

Apple’s iPhone and iPad are hypermedia devices. They dissolve the walls between nearly every known medium this side of holograms. The experience of using them is unlike what has come before – and that’s why they’re so successful. The very idea of TV + Internet is flawed. TV on the Internet isn’t really TV. It’s just a large video file, in an immense ocean of other video files. The Xbox, frankly, is a legacy device, still trying to bring the old dream of WebTV alive. That could change, but right now there’s little indication it will.

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Published 30 March, 2012 by Sam Dwyer

Sam Dwyer is an Analyst based in Econsultancy's New York office. He can be followed on Twitter @sammydwyer.

24 more posts from this author

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~ben

Microsoft does have the upper hand by having consoles in most living rooms, it makes sense for them to tap into the online TV market as the hardware is already in place.
How long this lead lasts is anyone's guess as with the advent of Onlive cloud gaming and internet TV's who knows what will happen in this market.

over 4 years ago

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Sam

Why does this article single out Apple´s Ipad and Iphone as the only real "hypermedia" tools in existence. Doesn't every of the gazillion tablet and touch screen smartphones in existence equally qualify as a legit "hypermedia" device? Or is the article just indulging in plain old "hype"?

over 4 years ago

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Sam Dwyer, Analyst at Econsultancy

They're not singled out to the exclusion of others.

The Blackberry Playbook before it was able to retrieve email certainly didn't qualify.

over 4 years ago

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Sam

I'll repeat my question again, as it is being avoided.

The author wrote: "...Apple’s iPhone and iPad are hypermedia devices. They dissolve the walls between nearly every known medium this side of holograms..."

What I'd like to know is why no mention of any other tablets or touchscreen smartphones, which equally function the same in this context. HTC makes them, Samsung makes them. Acer makes them, Lenovo makes them.

It seems to it is possible to write on this subject without descending into what seems like an Apple Inc product placement.

over 4 years ago

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Sam

My previous response was deleted, despite containing only facts and nothing remotely approaching foul or even angry language.

I'll repeat again: there are a ton models of tablets and smartphones. Why does the article chose to promote the Apple ones and pretend the others dont exist. Never mind red herrings about the blackberry. Why are none of the Android or Windows ones mentioned here. Do they not offer html, email and video integration. Or did Apple "invent" that too?

If you guys want to write technology articles then, you need to be more fair in your coverage of these products instead of serving up Apple product placements.

over 4 years ago

Matt Owen

Matt Owen, Head of Social at Econsultancy

Hi Sam, Your comment wasn't deleted, but was scooped up by our spam filter for some reason I'm afraid.

I've now published it above, apologies for that, the filter tends to be a bit over-zealous from time to time. It is a learning system so hopefully won't happen again, but do give me a shout if it does.

I agree that there are plenty of other tablet options, but the iPad is the dominant market device,and it's name is ubiquitous/exchangable with 'tablet' to the general public (as to some extent, is the iPhone, although this is changing). The iPad mention is simply because a relevant piece of research happens to be based on this device, not because of any anti-Android/Windows factor.

over 4 years ago

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Sam Dwyer, Analyst at Econsultancy

Thanks Matt.

Also, Sam, you don't have to write to the article - I wrote it, I'm listening, and you can address me directly. The great thing about digital words is that everything can be changed.

The most important point I can make is that I'm not "promoting" anything -- I don't stand to gain monetarily for expressing my understanding of the marketplace.

And that, above all else, is what I am trying to do. If you disagree with that opinion, okay, that's fair. As Matt points out, the iPad is the dominant product. The iPhone was first to market with a touchscreen, and captures the popular imagination in a way that no other device has. Also, there are recent reports that developers are abandoning Android, because the profits in that app environment are not as good.

What I want to know is, why is that? Sure, other manufacturers make devices that tick off the boxes of various functionalities. But why aren't they succeeding in the same way? What I attempt to do in the end of the above essay is explain why.

If you disagree with anything that I've said, I'd be keen to learn why. But you don't make any substantive points about the ideas I am attempting to engage with -- instead, you facilely accuse me of "promotion" and insinuate thoughtlessness, which I assure you is utterly untrue.

over 4 years ago

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Sam

My point is that is fundamentally dangerous for journalists to equate products with entire categories, as it amounts to marketing these products.

I dont wish to take up the red herring about whether anyone gets paid to plug apple products. All I'm say is that its irresponsible to write articles that lead the reader to conclude that "Iphone/ipod=tablet".

Thats all I am saying. Those who want to understand that basic point will. And those who want to keep dragging off on tangents will. But the point remains very focused. And its simply that you and many other journalists need to quit serving as free marketing for Apple. It is perfectly possible to write articles that dont do this.

And this is not about Apple. I'd have said the same 10 years ago if someone was lazily writing articles that suggested "Windows=operating system". Its your responsibility today to not make these kind of dangerous mistakes.

over 4 years ago

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Sam Dwyer, Analyst at Econsultancy

Why don't you quote things that I've actually written?

I wrote, "The experience of using [the iPhone and iPad] is unlike what has come before – and that’s why they’re so successful."

Is this incorrect?

over 4 years ago

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