A rumor surfaced recently that Microsoft was working on a set-top box that would compete with Apple TV and Roku. In a piece last week, I recommended Microsoft introduce such a box at a competitive price to help it extend beyond the market share currently enjoyed by Xbox 360. My reason for recommending this was simple: Xbox live network has a lot of interesting content to offer but not enough to get non-gamers to buy a console. A cheap STB with Xbox live might just do the trick. Xbox One likely won’t change that equation.
Microsoft did not announce pricing for Xbox One yesterday. However, we can guess at the floor for introductory price. Xbox 360 starts at $200 and special editions push the top of the line to $350. It’s a good bet the new console will cost at or more than the top price (some have speculated $400-$500.) Over time, prices will come down but it is unlikely they’ll breach the $200 barrier anytime soon.
Roku and Apple TV cost under $100 and come with access to a wealth of content (Roku has over 800 channels available today.) It’s unlikely a non-gamer will pay $400 more, plus the price of an Xbox Live subscription, to get a similar set of content. As well, the addition of a Blu-ray player will do little to move consumers when connected players are commonly available for under a $100.
Microsoft announced last year that Xbox Live members were spending more time consuming media on the box than playing games online. Everything about the media announcements for Xbox One seems to be aimed at extending that appeal within the gaming community, not outside of it. Except, perhaps, for one.
The integration of pay-TV service seems a little incongruous with the rest of the announcements. Gamers might opt to use their console in preference to a clunky STB if they have a pay-TV subscription (although this has been tried in the UK by BT with little success.) Pay-TV operators could borrow the mobile operator model of subsidizing hardware in exchange for long-term contracts. Though this might help operators and Microsoft, the approach is unlikely to generate much interest amongst non-gamer susbcribers.
Why it matters
The media features of Xbox One will not generate interest outside of the gaming community.
The console may help Microsoft increase its penetration in the living room, but only if it is a success as a gaming platform.
To really expand influence in the living room Microsoft needs a new strategy. Perhaps a cheap STB could be the way to do this.