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Xbox TV could soften the blow of an expensive Durango Exclusive
Xbox TV could soften the blow of an expensive Durango
November 27, 2012 | By Chris Morris

November 27, 2012 | By Chris Morris
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    32 comments
More: Console/PC, Business/Marketing, Exclusive



Six years ago, when Microsoft launched the Xbox 360, people scratched their heads at the company's strategy.

Two notably different SKUs? Wouldn't that confuse people? Surely this was a stumble by Microsoft, which would hurt it at retail.

Of course, it wasn't long before Sony announced plans for a similar strategy -- and Nintendo eventually followed suit with the Wii U. And you don't have to look further than Microsoft's 20-month run as the country's best selling console to see the strategy worked -- and worked well.

Now there are whispers that Microsoft is preparing to do it all over again, only this time instead of differentiating its systems by the size of their hard drives, it's rumored to be preparing a low-cost alternative, dubbed "Xbox TV," to its next-generation console, which will focus on "core entertainment services" (aka, the kind you don't play with) and cater to a casual audience.

It's a bold move – and one that, once again, has people scratching their heads.

There do, however, seem to be four clear takeaways from the rumor, if it is, in fact, accurate:

Durango's gonna be pricey

For those that complained about the $300/$350 pricing of the Wii U, the cost of the new Microsoft (and likely Sony) system is almost certainly going to be a rude awakening.

While a lot of focus has been on the capabilities of Xbox TV, not enough attention has been paid to the words "a low cost alternative." The Xbox 360 has chiefly been a system for the core gamer. Certainly, there have been steps to entice and welcome the casual player in the past couple of years (we'll get to that in a second), but the system's big hits showcase its core roots.

That audience, historically, has been more accepting of higher console prices. (There's a reason, after all, that Microsoft is still commanding as much as $350 for a six-year old piece of hardware.) And if Microsoft's willing to sell a stripped down version of the new system on the cheap to keep the casual audience hooked, that implies Durango may come with a hefty price tag.

Speaking of which…

Microsoft's not willing to cede the casual market

For much of this generation, casual gamers were firmly in Nintendo's back pocket. But a dearth of good games created an opening for Microsoft and Sony. The PlayStation stumbled a bit in its attempt to woo that audience with PlayStation Move, but Kinect caught people's imaginations.

Never mind the peripheral's shortcomings, it was unique enough that some casual gamers were willing to give Microsoft's console a try. And as Nintendo tries to lure back that audience with the Wii U, Microsoft seems determined to hang onto them.

Every Gamasutra reader knows that games make the system. But for the mainstream market, it's price that drives the decision to buy a system in the first place. If Xbox TV's video game options are as low-cost as the system is expected to be, that could be a powerful magnet in not only retaining its existing casual audience, but attracting people who are looking for more than their phones or tablets can currently offer.

It's not all about games

- The Xbox has long since moved beyond the world of games. Entertainment app usage has more than doubled in the past year among Xbox Live Gold members in the U.S. And Microsoft says U.S.-based Xbox Live members now spend more time watching TV, music, and movies than they do playing multiplayer games.

Put another way, Microsoft has achieved the console world's Quixotic impossible dream: It has become that Trojan horse of the living room. And it's certainly planning to expand on that, since both casual and core players have shown an interest. Exactly what those "core entertainment services" will be, of course, is impossible to discern at this point. It could be a rehash of current offerings (the streaming trinity of Netflix/Hulu.Amazon). It could be something more advanced, like its growing deals with cable and satellite companies.

It could even be a proprietary entertainment channel. (Don't forget, Microsoft hired CBS entertainment president Nancy Tellem to form an Xbox studio in September – and it tried to convince Conan O'Brien to bring his show to Xbox a few years ago.) It's more likely, though, that that will be a part of the upscale Xbox – at least whenever Microsoft launches that programming.

Bracing for Apple

- There's a reason Xbox TV is being compared to Apple TV. The whispers about Apple entering the TV space have been around for a while – and by the end of next year or 2015 at the latest, analysts seem fairly certain that Apple will begin to make a bigger push into the living room.

The company's initial focus will almost certainly be entertainment programming – but history has shown that game apps tend to follow Apple. Nintendo wasn't prepared for the disruption in the portable market and took a hit because of it. Microsoft isn't likely to make that mistake.

A low-cost Xbox with the next generation label attached to it (remember folks, "next generation" is a marketing term) and a wide variety of entertainment and game offerings that cater to a mass/casual audience? That may actually help Microsoft stave off the very real threat Apple presents to its customer base.


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Comments


TC Weidner
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on demand is already here, these xbox apple TV stuff are still spinning their wheels while things like on demand, hulu plus, and netflix change how people watch tv.

Alan Rimkeit
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Netflix FTW. They just got the last season of Supernatural and Walking Dead. They also have great kids shows like Transformers Prime. On top of that they have been getting all the new Marvel movies too. All for $8.95 a month? People can hate on Netflix but I say they are awesome.

Joe McGinn
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XBox TV will confuse and fragment the market, while deliving nothing that isn't already build into current TVs. Utterly pointless.

Michael Wenk
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I don't think I will be partaking of MS's new console if its much over 300$. It hurt a bit to buy a Wii U at 350, and I know there will be software I want for it. The MS console, not so much.

Michael Pianta
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I agree. I paid $400 for the 360 - I won't do that again. I justified $350 for the Wii-U since it came with a full game (retailing separately for $60) and the larger storage, but without a similar deal I won't go for more than that on any of the new systems. If they think they can push out $500+ systems like Sony tried to do they are fools and Nintendo will clean up. After all the Wii U will have had a year on the market by then, uncontested (in terms of new consoles), and they can do a little price cut and offer the basic system at $250 - once again having the vastly more affordable alternative.

David Marcum
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um yeah, I posted this on March 25, 2010

http://www.gamasutra.com/blogs/DavidMarcum/20100325/86985/Your_ga
me_will_never_reach_a_broader_market__motion_controls_and_3D_will
_not_save_you.php

" Microsoft – Since at least 1993, Microsoft’s mission has been to become your access point from your living room to the rest of the world. In a 1993 interview (http://www.anonymous-insider.net/windows/research/1994/0927-d.htm
l#62), Bill Gates said:

“And already there is the mania in discussing this so-called "Information Highway" which is the idea of connecting up these devices not only in business, but in home, and making sure that video feeds work very well across these new networks. So we've only come a small way. We haven't changed the way that markets are organized. We haven't changed the way people educate themselves, or socialize, or express their political opinions, in nearly the way that we will over the next ten years. And so the software is going to have to lead the way and provide the kind of ease of use, security, and richness that those applications demand.”

Here is Bill Gates again in a 2005 interview: (http://news.bbc.co.uk/2/hi/programmes/click_online/4195177.stm)

“The vision is that people should have the ultimate in convenience. Being able to get the things they care about on the appropriate device.

So you have got to have a very simple user interface, you have got to have a richness of software that's there and available and you have to bring together all the elements.

Communication because you want to send photos around, the TV guide because you care about watching that, the latest interactive games that are always improving in very dramatic ways, you want this to be very holistic. So the user thinks: 'Hey I just sit down and I can access what I want'. “

I think this sounds a lot like Project Natal on the X-Box 360 with Zune HD (or Netflix, if you must) and, of course, X-box Live. Is Project Natal for games? Microsoft says, yes! Please! They would like to have Natal in every home any way they can bring it. Is it for games? Well, no, its main goal is to enable you to scroll through menus with a wave of the hand or change the channel with a swipe of the hand. The goal of Project Natal is to bring people to the X-Box 360, not to games. But, if you want to help bring Natal in the living room for Microsoft with a game that uses Natal functionality, go ahead. Maybe you can build a game for core gamers that utilizes Natal in a fun way. But that is not Project Natal’s mission (nor, in my opinion, its strength).

The following links are interviews with gaming sites about Project Natal. Notice that the talking point quickly turns from gaming to navigation. Arron Greenberg states that “you would not want to play Halo Reach with your body… It is not designed to replace the controller”.

http://www.hulu.com/watch/129815/ign-project-natal-interview

http://www.hulu.com/watch/79469/attack-of-the-show-xbox-lives-maj
or-nelson-talks-project-natal"

Some of you didn't believe me. Time has proven me right.

As Nelson says, "Ha Ha!"

Leon T
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What is Mircosoft going to do that will blow the market away? We can already watch Netflix,Hulu, Amazon video, and even on demand on current devices.I only want the 360 to play games, because those media services work better for me on other devices. Unless the next Xbox or Playstation come with gamepad like the Wii U I will pass. That seperate screen is kind of addicting. I was playing my console in the airport while waiting for a plan to arrive.

David Marcum
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edit: My response was not directly related to your post. So I removed it.

Chris Liguz
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Apparently not longer than 1.5 hrs :P

Jokes/trolling aside, all the xbox and ps3 media & "entertainment" apps have been for lack of better words - tacked on.
Granted they did several redesigns of the interface, but it never really felt polished or cohesive. A lot of the entertainment apps are buried under various tabs or screens, not to mention all the loading time.

I dont think they will do much to really blow the market away, but if they continue to tout them as media / entertainment hubs, I hope they polish it more and make it a seamless experience.

Kenneth Blaney
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It seems the feature your asking for is what has been talked about here and there about the PSP and Vita. That is, the ability to use a data connection to use your home console more as a cloud device that you can access anywhere. Then, you can access anything on the hard drive of your PS3/4 from your Vita at any time.

There is occasional buzz about that, and I hope Wii U's new controller gets Sony moving in that direction for their PS4.

Duong Nguyen
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Still trying to win the "SetTop" wars Microsoft? that world has already left you behind. Xbox live is an accessory service wholly dependent upon the 360 but it can't stand on its own. It doesn't have the content. Look at whats happening to it's sister service on the PC.. Games for Windows Live. Once the lifecycle of the 360 plays out what then?

Sure the 720 will be around but that's just another console with another accessory service, etc.. Future TVs will have Internet access / Android built right in and probably come with a subscription to a streaming service, then what? Still trying to sell them a "SetTop" box, still trying to "control" the living room. Same old story..

Michael Rooney
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AppleTV is a pretty solid device despite what you might say. If they can match it's capabilities and add enough horsepower to play XBLA games, they'd have a winning product imo. They way their integrating their devices is interesting too.

I won't buy it, but I'm probably not their target market.

@"Future TVs will have Internet access / Android built right in and probably come with a subscription to a streaming service, then what?"
Then Microsoft doesn't really give a crap? Android is already difficult to support on phones with dominant market share because of how much crap manufacturers and carriers mess with it. I can only imagine what a pain in the ass it would be for developers and consumers once it starts showing up on TVs. "Oh shit my framerate drops on the 32" bravia, but not the 57" Phillips... wait why does the bravia still have a modified version of android x.x, that's like 10 months old!"

Seriously, a Gaikai enabled tv would be a much bigger threat than an android enabled tv.

Bob Johnson
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I was going to say smart strategy. MS is usually good at that.

But ...is this just going to be the Xbox with a new label on it and a die shrink to enable it to use less power and come in a smaller form factor?

So perhaps smart but not exactly new.

I mean look at what Nintendo is doing now. Selling the Wii for even cheaper right alongside the Wii U.

Sony did it with the PS1 and PS2. REmember it took the PS3 and even Xbox nearly 2 years to start outselling the PS2.

Just a name change is all. Otherwise business as usual for a console manufacturer that had a successful enough console to continue to selling it alongside their new more expensive console.

IF it is just for casuals you would have to assume MS would leverage their 360 Arcade library and thus make it the same hardware.

Still chance this is an Arm-like device that will leverage smartphone games on the Win8 phone and tablets platforms. And have the ability to use an xbox controller and maybe Kinect. and leverage Xbox Live more than the Xbox hardware.

Cary Chichester
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Microsoft is already selling the 360 for $99 with a two-year Xbox Live contract. Being that the "core" gamer will likely purchase Xbox Live anyway, subsidizing the cost of the more expensive next-generation console with a contract for Xbox Live sounds like a better alternative than a standalone Xbox TV, especially if Microsoft continues the strategy of requiring Xbox Live Gold for you to access features like Hulu and Netflix. If the 360's launch with two different SKUs was confusing, I can't imagine what will happen when they release an Xbox that can only play certain games.

Doug Poston
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"XBox TV" is probably not another game console SKU.

"XBox" is now Microsoft's brand name for anything entertainment related, not just their gaming consoles.

Microsoft already has "XBox Video" and "XBox Music" apps that run on Windows 8 platforms (Surface, Desktops, Phones, etc.).

I think it's likely that Microsoft might license "XBox TV" to other hardware manufactures (Sharp, LG, Toshiba) and/or create their own cheap set-top boxes (ala AppleTV), but this wont be a "Next-Gen" game console SKU any more than "Sony BRAVIA" is a Playstation SKU. ;)

TC Weidner
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if I were microsoft. I make the 720 be BOTH, a game console and a HD converter for the major carriers ( Fios, comcast etc) I give the damn thing away FREE with a two year or more subscription to that carrier and xbox live. I sell ALL MY games via the Online Store ( no middle men to pay, no used games cutting the margins, no physical copies at all) BOOM , success. You turn on your TV, you simply then select, TV or Games, and away you go. Seamless.

Kenneth Blaney
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Success UNLESS people end up buying fewer games because they can't resell them and/or can't use resale money to buy new games. Compounding this the market becomes even more fragmented because they might not be able to sell their Comcast xBox 720 to people with Fios (or whatever). This might not be a matter of MS locking down the system, it might just be impossible to even make a box that works with all cable providers.

TC Weidner
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@Kenneth, without middlemen involved new games can find a much lower price point and still allow huge profits. Right now a developer game sells in a store for say 60 bucks, of that 60 a developer would and is lucky to see 15 bucks of it. And when that game is resold and resold again and again used that developer makes NOTHING. So in a life of a game, it could be sold for 60+ 45+ 30+20 ( new once, used 3 times) for 155 bucks, and the developer who made the game makes 15 from that 155. Using direct digital download, developers would see that vast majority of the gross sale.

as far as making a 720 that works with cable and fiber optics, this isnt rocket science tech in those HD boxes.

Paul Marzagalli
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At this stage, I'm simply curious to see what Microsoft and Sony's philosophy on the evolution of gaming is, much as Nintendo displayed with what the Wii U is (and what they plan for it to be). I'm not one of those people who thinks there needs to be console turnover every five years. I have been thrilled that this generation has endured for as long as it has. One of the reasons that I became a primary console player is that I enjoy playing on my couch with friends and I detest the incremental investments (punctuated by significant costs) that it takes to stay relevant in the PC business. I would love to play Skyrim with all the fancy graphical mods and great draw distance, but I'm willing to trade that off for ease and cost-effectiveness of playing it on a console.

I get the sense that both companies are terribly reticent to put out something new, that they'd be happy to keep things status quo for another couple of years, but I honestly don't know. One of the more fascinating storylines in the gaming industry has been watching all elements of that community (devs, reporters, analysts, players, fanboys, etc.) react to this extended generation.

Paul Marzagalli
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I do, but on the other hand, I feel it offers the door for different (and better) kinds of innovation. I'm not sure the indie scene explodes as much via consoles (Braid, Super Meat Boy, etc.) if Sony and Microsoft weren't looking to pad things out over the latter half of the console generation.

GameViewPoint Developer
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Maybe I missed something but this sounds exactly like what the OUYA is meant to offer. When all the fuss over that was made I made the point that all you need is for Apple to release a version of Apple TV which plays casual games, and it's all over for the OUYA. Looks like Microsoft is beating Apple to the punch. I think what we are looking at here is the major players trying to own the Casual gaming market by offering gaming integral to the TV. So we have Sony with Gaikai, we have Microsoft with (if true) this set box TV, and perhaps at some point Apple with ios games played by their Apple TV. All of which is going to squeeze Nintendo out unfortunately. The next few years are going to be interesting.

Daniel Martinez
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Is Durango the name for the new console or just the cover name for the real name? I can't believe Microsoft will actually go with this name.

Cary Chichester
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Durango is likely the project name while it's in development, similar to how Project Natal eventually became Kinect.

Nick Harris
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Durango is the code name for the next Xbox console during its development. It won't be called the Xbox 720 as that has lost all impact through speculative over-use in internet forums. They currently intend to call it the Xbox 1080 and plan to launch it in Aspen with a new Shaun White snowboarding title that makes innovative use of its built in Kinect 2.0 features. Actually, 1080 refers to the console's ability to display graphics in full 1080p HD at 60 frames per second. Do not expect Microsoft to make much noise about 3D as they are strategically leaving this aspect open to Sony who want to push their even higher definition TVs, their focus is going to be on making the 1080 a kind of "Multimedia jukebox" in which all games, music, photos, videos, TV and movies can be either collected or streamed from their expanded Marketplace. To this end the console has a whopping 1TB HDD in it, but economises by omitting to include Blu-ray. As a result the 1080 looks set to be about $150-$200 less than the PS4 when they both eventually have launched. The subtext here is that Microsoft are aware that we are in a global recession and are mainly concerned with not losing hardcore 360 gamers to PCs, Kinect 2.0 and their Smart Glass technology is their way to pay lip service to the competition they face from the Wii U although many at the company have resigned themselves to the strength of Nintendo's IP and joke about how the Xbox only has Blinx the Timesweeping cat as a mascot, they hope that Sony over-specify the PS4 so that only a very few can buy it and the new 4K 3D TV that is needed to get the most out of it. Incidentally, Microsoft are up to their old tricks again, copying other's ideas when they have been proven to work well in the market, consequently the 1080 will allow you to pause any activity at any point, switch to another (or switch off) and later be able to resume from the exact place where you left it as in iOS - which will obviate the need for games to have checkpoints and save menus.

Johnathon Swift
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What? A low cost... this is just Microsoft throwing it's hat into the "smart tv" ring, again. It doesn't portend ANYTHING about the cost of the next console.

It's just "hey, here's something we've been trying to do for years, again." Microsoft might be big and unwieldy, but they aren't stupid. The console will launch at $300-$350 just like it's predecessor, even if MS has to cut out some shiny graphics tech to do it. Moore's law would say to expect 16x as powerful a console, with 8 gigs of ram. Guess what? The next Xbox doesn't have that.

A hard drive? Yes. Kinect 2.0? Yes. And they'll make do with "good enough" in the shiny graphics department, because they know even if Sony makes something twice as powerful it's high cost and etc. aren't going to make it sell appreciably more, and probably less.

[User Banned]
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k s
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You are aware that at sony at least the engineers have a problem with listening to management and will likely create an over priced machine because they like new tech.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Nooh Ha
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Its an interesting idea that reminds me of some of Sony and Sega's unfulfilled ambitions in the 90s to add cable STB functionality to consoles and gain mass deployment via cable network contracts.

One of the big problems with this strategy is that it may well work for the North American market but outside of NA, the streaming TV/movie market is very patchy with many major territories in Europe having few if any services of note. In the UK (arguably Microsoft's only other major Xbox market) for example, market leaders Lovefilm, Netflix and Sky's streaming services are utterly woeful when compared to US services with performance problems and terrible selections - and their rates of improvement are glacial thanks to rights holder resistance. They are certainly nice to have on a console but selling a console based on access to such services will be really challenging IMO.

Michael Rooney
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I would kill a man to be able to easily stream BBC content in the US...

Nooh Ha
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errr (looks away nervously)... OK.
But BBC streaming is entirely free and ubiqitous in the UK so again, there is still no viable USP for a general entertainment Xbox.

wes bogdan
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Mor importantly xbox tv will translate into an expected price hike in xbl perhaps even xblg and a pricer tier xbl platinum which will be required for xb tv.

Even with paying to game online i never understood why netflix,hulu and amazon were roped in and gold became an all or nothing while playstation has free online and doesn't rope in extra unattached serveces.

For the next gen i expect sony to keep online free but have dedicated servers for plus members rather than throw it all in a blended server which games would have to share.

Xb tv should be interusting but i would expect ms to wall off the aformentioned services behind xb tv.


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