Carriers Should Love the Next Gen Gaming Consoles

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Business 2.0: The next generation of gaming consoles — Microsoft’s (MSFT) Xbox 360, Nintendo’s (NTDOY) Revolution, and Sony’s (SNE) PlayStation 3 — were the talk of the Electronic Entertainment Expo, or E3, the giant industry show held in Los Angeles last week. Attendees couldn’t get over the machines’ eye-popping graphics and supercomputer-level processing muscle. But the real story here is that the new crop of consoles is superconnected in a way earlier generations could only dream of. Armed with Ethernet and Wi-Fi, these devices are designed to serve as launchpads for widespread online gaming, a potentially lucrative business that so far has failed to attract users beyond the hard-core. If all goes according to plan, not only will the videogame industry get a boost but the broadband business will too. Continue reading at B2 website.

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Alex Rowland

Sorry, but I couldn’t disagree more, Om. The problem is that most broadband providers are telecom and cable companies that earn much more money on their other proprietary services. In the case of telecom, it’s phone service. In the case of cable, TV. As more of their services transfer to IP over their broadband connection, the more revenue they are going to lose. Broadband prices might creep up, but they’ll never rival the revenue they generate off of these other services (and it won’t even be close on the margin).

Broadband Internet access is ultimately a commodity. And more and more services will move to Skype-type models. Add cheap broadband wireless to the mix and you’ve got narrow margins as far as the eye can see. The new game consoles should terrify broadband services providers because most of what they currently provide will be imbedded in the device as software. Microsoft, Sony, et al will provide the valuable stuff while the carriers provide the commodity service.

They’ll milk what they have as long as possible, but the future is cheap software-based services on open networks. Neither cable nor phone companies will be very comfortable in that setting.

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