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Summary:

So now we pretty much know why Microsoft is doggedly pushing ahead with plans to make a Halo movie, even after two studios balked at the budget, and the unlikelihood of such a movie making any money at the box office. It will almost certainly be […]

So now we pretty much know why Microsoft is doggedly pushing ahead with plans to make a Halo movie, even after two studios balked at the budget, and the unlikelihood of such a movie making any money at the box office. It will almost certainly be the topline content for Xbox Live Marketplace, the new ITunes-style movie/TV download service for Xbox 360 owners announced yesterday. Last month I speculated about “Halo movie trailers and excerpts downloadable only on Xbox Live”, but clearly I wasn’t thinking big enough. No, Xbox commandant Peter Moore is looking forward to a time when millions of Xbox Live subscribers will download the entire movie to their 20 gig hard drives, either in standard TV resolution, which will take up a fifth of the drive, or in HDTV format, which will suck up most of that space, and take up half the day, to acquire.

That last point is probably the biggest stumbling block to Xbox Live Marketplace succeeding:

With just 20 gigs in the console’s standard hard drive set-up, you’re talking about 10 TV episodes, or five movies, or one high definition movie 10 high definition TV episodes or five HD movies. Most gamers can churn through that content in days. Then comes the painful decision of deleting several movies or TV shows you paid $1.99-$5.99 to download onto your hard drive (Microsoft is still mum on the pricing, except that it’ll be competitive with existing services) to make room for more.

That’s not to mention Microsoft’s past history with digital rights management extremism with the Xbox, already onerous when it comes to ripping music files, which will surely grow even more strict, when the MPAA brings its attorneys into play. A service that isn’t as seamless as ITunes (of for that matter, YouTube), is destined to failure.

All that to one side, it’s still a strong move on Microsoft’s part, beating out the other consoles on that front, even catching them flat-footed. “We haven’t announced any content besides games,” a befuddled-sounding spokesman for Sony Computer Entertainment America told the Times, when asked to comment on the news, “but all the executives have said that downloading other entertainment content is something the Playstation 3 capable of doing.” (As a statement, it’s on a par with the kid who watches Tony Hawk pull off an amazing stunt, then asserts, “I could do that, I just don’t want to.”)

A Sony statement sent to Next Gen is somewhat more measured, but about as, well, desperate, playing up the fact that Xbox 360 is sold in both non-hard drive and hard drive configurations. “We would never segregate or shut out any of our consumers from our entertainment experience because they didn’t buy the top of the line system”, the peculiarly self-righteous announcement sniffs. It’s always unseemly when an international corporation apes the language of the civil rights movement– especially when PS3’s price point of $599 doesn’t exactly make it the Rosa Parks of consoles. And we’re about to find out just how much Xbox Live Marketplace drives consumers to buy the hard drive configuration. My guess is, it’s a deal-sealer.

Update, 4:56pm:  Corrected an estimate of Xbox 360’s download capacity.  Also, GigaOM reader Kevin C. Tofel sends along word that there will be no Zune support for new Xbox Live Videos.  (Zune is essentially Microsoft’s answer to the iPod/iTunes.)  “Got the official word from Microsoft and this surprises me,” he writes. “HDTV and movie content over broadband to your 360: great! No re-encoding and transport to Zune: not so great (unless you’re Apple)! I’d bet a Zune player that this will change inside of 60 to 90 days.”

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  1. I would say the biggest stumbling block is that the Xbox360 represents a market smaller than the original XBox (less than 20 million). Yes, it is a strong move and makes them look more attractive than the other consoles. But the reasons that the same number of people (if not more) will buy a Wii and that 3-5 times as many people will buy a PS3 has nothing to do with the lack or the presence of a video download service.

    And even if it’s already in place and already connected to the web and TV, it doesn’t really compete with Apple’s media strategy. Whether or not the iTV sells well or if the 60 million iPod owners are purchasing digital downloads, Apple’s market is everyone that owns a Mac or PC.

    This, even if it is Microsoft’s best platform and makes them look like a leader with the components in place, is limited to a very small base that is not likely to grow beyond it’s core market. The market that represents only 30% (and maybe less) of the overall console market.

  2. “With just 20 gigs in the console’s standard hard drive set-up, you’re talking about 10 TV episodes, or five movies, or one high definition movie.”

    Well clearly the company is banking on selling larger hard drives. Last month there was that photo of a slide from an MS Korea meeting that showed a 100GB drive. There are plenty of rumors about an 80GB drive just from yesterday’s announcement.

    I agree with the previous poster that this makes MS seem like a leader in the space. Personally, I’m happy that it’s being progressive and changing the way people use consoles. With XBL, the Achievements system, and the video capabilities, I’m doing much more with a console than ever before.

    And no, I’m not an MS shill. I wasn’t a huge fan of the first Xbox and I’m surprised at how much I’m enjoying the 360.

  3. Michael Griffiths Tuesday, November 7, 2006

    As much as I appreciate the analysis, you could at least give believable size estimates. It’s WMV-HD (VC1) compression.

    Engadget has a good summary, but:

    An average HD movie download should be between 4-5GB, and a two hour SD movie would be 1.6GB.

    An average 1 hour (44 min) HDTV download should be about 2.2GB, and an average 1/2 hour (22 min) HDTV download should be about 1GB. A 1 hour SDTV download should be about 600MB, and a 1/2 hour SDTV download should be about 300MB.

    You can fit 4-5 full length HDTV movies, 20 HDTV TV episodes, or over 60 SDTV TV episodes (30 mins).

    Yes, the drive is too small. Yes, download time will be a problem.

    But the numbers in your writeup are a gross exaggerations and as far as I can tell, entirely un backed up.

    Pricing isn’t mentioned, but licensing terms are already widely known: TV episodes can be downloaded and unlimited amount of time, while movies are on a 24 hour rental basis.

    Pricing should also be competative, so you’re talking ~$3 for a movie and maybe $2 for a TV episode.

  4. Wagner James Au Tuesday, November 7, 2006

    You’re right, Michael, I’ve corrected accordingly based on this paragraph from the Times:

    “The video downloads, especially those in high definition, will take up a lot of space. Microsoft says a one-hour television program in high definition will take up about 2 gigabytes of the console’s standard 20-gigabyte hard drive.”

  5. William Spaetzel Tuesday, November 7, 2006

    While it is unplesant that you would have to delete movies that you have downloaded, you won’t have lost the content forever.

    Anything that you buy over the Xbox Live Marketplace you can download again for free. There is no limit on the number of times that you can redownload the content.

    So it isn’t too bad that there isn’t room for lots of content on the drive. Just delete the stuff you have watched already. If you want to watch it again, just go into your download history and download it again.

  6. I can see an accessory play here as well. The 2007 Holiday Season (for Halo game) might be too early for a fully upgraded XB console… but it wouldn’t be too soon to launch an external “media storage device” fully capable of working with the XBox.

    Something in line with BuffaloTech’s TerraStation Home Server…

    Make it networkable so that the Media Edition PC could use it to store the tv shows, movies and music… plus they already have MS branded networking gear… full home entertainment manager coming without being seen.

    Hell, they could just give away the Halo movie with modified DRMM just to get people to buy the hardware and get hooked… download via the XB, watch on the PC and any computer in the house, transfer to the portable… even share clips with friends.

    Of course, if they hadn’t thought of all that, then they should.

  7. All I know is that you have to be a complete idiot to buy anything from MicroSHIT.

  8. The fundamental difference between Apple and Microsoft is that “iTV” out-of-the-box expands the distribution of your existing multimedia content to your TV (from your computer or iPod) whereas Xbox with Urge video store (or whatever it is called) restricts it to one specific hardware box. In this scenario, Xbox is a sealed system, whereas “iTV” is the enabler for greater redistribution.

    I’m betting on “iTV”.

  9. The 360’s tiny hard drive doesn’t make this very appealing and when you look at the # units shipped in the US, I can’t see this doing very well. As for the Halo movie…

  10. Provided downloading movies to XB360 sees a decent take rate, you can bet MSFT will make available a new Hard drive with larger capacity to avoid the “what should I delete now”.

    Perhaps we will see a deal with MSFT and a consumer network attached storage maker (Lacie, Seagate, Ximeta) to provide more storage and additional revenues. That would fit with the traditional Microsoft practice of making users upgrade hardware to get new capabilities.

  11. I just got a warning email from my ISP about downloading too much data. The main culprit? My downloads from Xbox Live.

    I wouldn’t welcome having to re-download HD movies because I ran out of space. I think alot of users would experience these sort of bandwidth issues in any case but a small hard drive just exacerbates the problem.

  12. What about movies that are just renders or the game content from the game disk? That’d be small and probably just as enjoyable as a normal movie.

    Also, what about MSFT’s IPTV stuff? That may figure in here.

  13. GigaOM » Will Halo3 help Microsoft secure the Digital Living Room? Saturday, May 12, 2007

    [...] Enter Halo 3, the jewel in their gaming crown, and the franchise the company hopes can not only boost online membership to higher levels, but bait gamers into purchasing additional downloadable content such as movies, music, TV shows, and episodic game content. [...]

  14. GigaGamez » Archive Will Halo3 help Microsoft secure the Digital Living Room? « Sunday, May 13, 2007

    [...] Enter Halo 3, the jewel in their gaming crown, and the franchise the company hopes can not only boost online membership to higher levels, but bait gamers into purchasing additional downloadable content such as movies, music, TV shows, and episodic game content. [...]

  15. Bleam » Blog Archive » Will Halo3 help Microsoft secure the Digital Living Room? Friday, June 8, 2007

    [...] Enter Halo 3, the jewel in their gaming crown, and the franchise the company hopes can not only boost online membership to higher levels, but bait gamers into purchasing additional downloadable content such as movies, music, TV shows, and episodic game content. [...]

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