Content provided in partnership with

MSOs Are Game to Give Xbox a Tryout

Say what you will about Microsoft, but it knows how to make a buck. In the 16 years since it went public, the Redmond giant has seen its share price increase by 44,000%; thanks to stock options, almost a third of its 40,000 employees are millionaires. (According to local lore, you can tell the rich geeks from the rank-and-file code jockeys by the "FYIFV" - an acronym for "F*ck You, I'm Fully Vested" - buttons pinned to their polo shirts.)

Even in defeat - and Bill Gates and company have seen their fair share; anyone remember "Bob"? - Microsoft always manages to learn from its mistakes. So it should come as little surprise that the company is taking a highly imaginative approach to reassessing its Xbox video game console.

Most Popular Articles in Technology: An overview of continuous data protection; Why all those current ratings?; Many countries now have a mobile penetration rate above 100%, report says; The Tata Group's big telecom gamble: VSNL's recent acquisition of Tyco ...; MEASURING BANK BRANCH EFFICIENCY USING DATA ENVELOPMENT ANALYSIS: MANAGERIAL ...; More »

Last week, Microsoft announced that ten U.S. and three Canadian broadband service providers would be the first to support its Xbox Live initiative, an online gaming service that allows players to go head-to-head with other subscribers, while interacting with each other via the Xbox Communicator headset. Representing nearly 80% of the combined U.S. and Canadian broadband markets, the current list of "Xbox Compatible" broadband service providers includes MSOs such as Charter, Comcast and Cox.

According to Xbox marketing manager David Hufford, the real-time interactive element of Xbox Live should drive sales of the console while providing operators a tidy boost in high-speed data revenue.

"We looked at the install basis of Xboxes in the U.S. and realized that this is probably the most consumer-friendly approach we could take," Hufford says. "There are about 2 million Xboxes deployed out there today, and currently 50% of those Xbox users have broadband."

Steve Gorman, director of marketing for residential data services at Cox Communications, says he has high hopes for the Xbox Live launch. "I think it's another way to leverage the power of broadband," Gorman says. "It feels as though we're on the cusp of a revolution."

While Xbox Live is designed to work with most high-speed Internet services, the Xbox Compatible service providers are working in concert with Microsoft to help "ensure a great user experience," Hufford says. "The Xbox Compatible plan allows for quick, plug-and-play installation and a convenient one-time-only sign-up model. All the customer has to worry about is beating their opponent."

Of course, all that cable has to worry about is beating satellite, and broadband is the 10- megaton nuke in its arsenal. The ops that have signed on as Xbox collaborators are speculating that gaming's inarguable popularity will drive a significant portion of households without high-speed data service into the broadband fold.

A recent report from the White House's Office of Technology Policy suggests that the Xbox model may have a chance of succeeding. Almost all U.S. families live in areas where a high-speed Internet connection is available, but many see no compelling reason to pay extra for it, the report states. It goes on to cite a need for more online music, movies and games in order to make broadband connections more popular.

"New applications and services that consumers want and businesses need will provide the tipping point for broadband demand and usage," the report reads.

Elsewhere in the document, Datamonitor research is cited: "The online gamer market will grow from $670 million in 2002 to $2.9 billion in 2005."

Not everyone, however, is rushing to judgment on the feasibility of leveraging online gaming as a means of hooking subs. Yankee Group senior analyst Michael Goodman is one observer who isn't wholly convinced. "I'm trying to get a sense of what's in it for the MSOs," Goodman says. "I can't see it. Then again, if even 10% of present Xbox owners become broadband subs, that's a huge advantage.

"Whatever the case, it looks to give the consumer a unique broadband experience."

Meanwhile, Xbox continues to trail Sony's Playstation 2. ("Everybody lags behind Sony," Goodman says. "Microsoft's goal wasn't to supplant Sony. They've built a respectable install base, and that's good enough.") Either way, with $2 billion invested in Xbox, Microsoft definitely isn't playing games.

THE NEXT QUESTION:

*Will Xbox Live and other online gaming services provide a viable revenue stream for cable ops?

Technology Industry

MSOs Are Game to Give Xbox a Tryout

Cable World, Nov 11, 2002

Find Research Guides for:

Find Featured Titles for: Sports

Most Popular Articles in Technology

Most Popular Publications in Technology