Consoles Make Their Mark In The Latest Push To Control The Living Room

This story was written by Tameka Kee.
At CES, companies like Netgear rolled out new set-top boxes and manufacturers like LG, Samsung and others cut deals to embed web content on their TVs, but video game consolesand Microsoft's Xbox 360 in particularhave already staked their claim in the latest push to control the primary TV set. 

Microsoft (NSDQ: MSFT) has already transformed the Xbox 360 into a movie and TV delivery device after touting the potential when the console launched in 2006. It's also steadily increased the Xbox Live Marketplace's library, sealed the deal with Netflix, and finally unveiled the New Xbox Experience late last year, with an expanded HD library and easier access to all the content.

And the efforts are paying off: During the CES keynote, Robbie Bach, Microsoft's president of entertainment and devices, said Xbox Live subscriptions had grown 70 percent year-over-year, topping 17 million, with more than 3 million added in Q4 alone. (He didn't break out how many were the free Silver subscriptions versus the Gold level, which gamers pay up to $8 per month for). A day later, Mark Kroese, GM of Microsoft's entertainment & devices advertising business group, told attendees at the Reinventing Advertising Conference that Xbox Live was the "number one HD download site in the world in terms of volume."

Of course Microsoft execs are going to be bullish about Xbox downloads, but given that they've already sold more than 11 million Xbox 360s in the U.S. (per the most recent NPD Group stats), the company has a definite advantage over *Apple* and the other set-top box makers when it comes to getting that content to the TV.

More after the jump.

Sony (NYSE: SNE) got a much later start with the PS3, finally announcing video downloads on the PlayStation Network in July 2008. But during Sony's CES keynote, Sony Computer Entertainment President Kaz Hirai said there were roughly 17 million subscribers to the PSN. And 5.7 million PS3s sold in the U.S. makes for a significant potential user base as well. Even Nintendo plans to get into the content downloads game with the Wii. With 13.4 million of the family-friendly units sold in the U.S., the console will be a media consumption monster if Nintendo actually decides to pursue major distribution deals here.

Contrast those sales numbers to what little publicly availabl stats we have on some of the third-party set-top boxes and the advantage of the consoles becomes clear: a source told The Business of Online Video's Dan Rayburn that Roku had sold about 100,000 of its Netflix (NSDQ: NFLX) players two months after its launch in 2008, while AppleTV has sold just over 400,000 units over the past two years. With consumers cutting back on purchases across the board, and electronics sales forecast to remain flat this year, even the $99 Roku player might find it hard to move a meaningful number of units. And of course, there's still the question of how many boxes hooked up to a TV are too many? If someone has a cable or satellite box with DVR and a console alreadywill they even be in the market for another device?


By Tameka Kee
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