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Summary:

When I see the headline “How Microsoft can beat iTunes” I think of the iTunes application and its ability to purchase music to download and play within the application and on iPods. But CNET Executive Editor David Carnoy is actually referring to the iTunes Store and, […]

When I see the headline “How Microsoft can beat iTunes” I think of the iTunes application and its ability to purchase music to download and play within the application and on iPods. But CNET Executive Editor David Carnoy is actually referring to the iTunes Store and, more specifically, the ability to purchase digital movie downloads and play them on your TV with the just-released Apple TV.

But in that sense, Apple has no lead over Microsoft since the iTunes Store currently has a rather anemic selection of downloadable movies, with only three studios (Disney, Paramount, Lionsgate) onboard, and Microsoft has already sold millions more XBox 360s than Apple has yet sold Apple TVs. Carnoy even admits that “in many ways Microsoft is ahead of Apple when it comes to downloading and playing video content on your TV.”

So, misleading headline aside, what is his column actually about? Whether a monthly video subscription model via XBox Live would be more successful than the iTunes purchase-to-own model.

Flesh it out with a Netflix-style service that lets me hold on to as many as three digital movie rentals at a time, and a Rhapsody-style music service, and I’d happily go higher. Make these services streamable to other Xbox 360s and Media Center/Vista PCs in the house–and smart phones on the road–and you’ve got the beginnings of a compelling digital entertainment ecosystem. For the price of three iTunes movie downloads, Microsoft could be offering a monthly digital entertainment cornucopia. Which would you rather have for $45?

With six million subscribers to NetFlix, we’ve seen that a monthly video subscription model can be successful. And Apple has shown no interest in renting any kind of digital media, movies or music. So the door is seemingly wide open for Microsoft, no stranger to subscription services, to walk in and slay iTunes.

I still hope Apple and Sony step up to the plate to offer worthwhile alternatives to that Microsoft vision–I just think Redmond has the resources and the will to make it happen before anyone else.

Redmond has resources?! Wow, thanks for that insight, CNET!

If you want to answer their loaded TalkBack question of “Would a subscription-based Xbox Live video service kill iTunes?” visit CNet.

  1. I think MS needs to do a bit more than that, however. The steaming has to be opened up if they want to crack open the market – that means macs, other codecs, and most importantly – all windows os’s (from xp on, at least.)

    Setting up the xbox to only work with a few of the versions of Vista and only Media Center XP was a stupid, ridiculous move on Microsofts part.

    Also, and this is important – the xbox may have rentals, which is great, but their selection of media is HORRIBLE and there is no way to back up actual purchases.

    But, on the plus side – high definition content is already available.

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  2. MS will have some success with LIVE but it will not translate into the “mass market” like the ipod/itunes combo:

    The Xbox audience will never cross over into the mainstream.

    The Xbox audience is willing to buy/rent some movies but it will never be a substantial portion because the geek audience is never satisfied with convenience.

    Any MS hardware will annoy people in some manner (hell, the whole “must buy $5 worth of LIVE cribbit poomnts that can never be refunded is annoying already).

    So, Live will have some success but beyond gaming – no.

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  3. Hahahaha CNET…

    No, but seriously… there is a few things Apple can do to grow in the video market share, such as having videos being watched only a couple of times for a few bucks (such as the Amazon video deal), and offering IPTV. Combine those two with the Apple TV and this could be HUGE.

    But Microsoft “kill” iTunes… that doesn’t sound likely. Isn’t there like 3 million XBoxes out there right now? But how many iPods??? And how many people use their XBoxes for media centers to begin with???

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