Market Insight

Microsoft announces Xbox TV content deals

October 05, 2011

Laura Aguilera Laura Aguilera Senior Research Analyst, Service Providers & Platforms

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Microsoft has announced new content partnerships in 20 countries that will bring a number of new services, partners and functionality to the Xbox 360 as part of a major expansion of content available through the console. The new services will mostly become available before the end of 2011 with the next major system update of the Xbox 360.

Global partnerships include:

Australia - ABC iView, Crackle, SBS on Demand

Canada - Astral Media's Disney XD, Crackle, Maple Leaf Sports & Entertainment/Real Sports, MSN with MSNBC.com, Rogers On Demand Online (RODO), UFC, Vevo

France - AlloCine, MSN with MSNBC.com, Muzu.tv

Germany - AlloCine, LOVEFiLM, MSN with MSNBC.com, Muzu.tv, ZDF

Italy - MediaSet, MSN with MSNBC.com, Muzu.tv

Japan - Hulu, MSN with MSNBC.com

Mexico - MSN with MSNBC.com, Televisa

Spain - AlloCine, Antena 3, Canal+, GolTV, MSN with MSNBC.com, Muzu.tv, RTVE, Telefonica

U.K. - BBC, blinkbox, Channel 4, Channel 5, Crackle, LoveFilm, MSN with MSNBC.com, Muzu.tv, Vevo

U.S. - Bravo, CinemaNow (Best Buy), Comcast, Crackle, EPIX, HBO GO, iHeartRadio (Clear Channel), Manga Ent., Syfy, "The Today Show", TMZ, UFC, Verizon, Vevo.

In addition YouTube will be available in 22 markets and Dailymotion, 32 of the 35 Xbox Live markets. Nearly 40 total partners will be joining providers like Netflix, ESPN, Hulu Plus, BSkyB and Canal+ already partnering with Microsoft.

The announcement marks a significant expansion of the video proposition available via the Xbox 360, and, in keeping with Microsoft's general strategy, much of it will require that consumers subscribe to Xbox Live Gold in order to access the full bouquet of services. In effect is borrowing a tactic well established in pay TV - adding value to a subscription to increase subscriber numbers but also to reduce churn from Microsoft's paid subscription service. Consumers spent $750m on Gold subscriptions in 2010. Based on our understanding of how current video services on Gold have performed there is every reason to think that these additions will help to extend the appeal of the services in other regions.

It is worth noting that some services (e.g. the BBC iPlayer) will not require a gold subscription. In these cases the presence of the service remains important for the Xbox to remain competitive as a home entertainment hub, Microsoft has waived is normal requirement that the OTT service must be limited to Gold subscribers. iPlayer has been available on the PS3's main menu since September 2009 and since then is understood to be the key driver in 30 per cent year on year increase in iPlayer streams delivered through games consoles. By contrast over the same period PC usage of the iPlayer grew by just under 13 per cent year on year.

This console-driven performance of OTT video stand in marked contrast to some of the initiatives to leverage the Xbox as an IPTV STB (e.g. AT&T U-Verse) which, as IHS Screen Digest understands it, has met with relatively low adoption.

 

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