Sony wants PlayStation users to be able to watch linear television through their game consoles. So it’s attempting to secure the content rights needed to assemble its own, virtual pay-TV service and has reportedly landed at least one major deal, with Viacom.
Microsoft likewise wants to enable Xbox users to watch linear TV through their consoles, but its trying to integrate existing pay-TV services into the Xbox rather than going over-the-top. Both Verizon FiOS and Comcast make some programming available on the Xbox 360 via apps and this week Time Warner Cable went live with an Xbox Live app that will eventually deliver 300 linear channels to the console. The next version of Microsoft’s console, the Xbox One, features an HDMI port that will allow the console to daisy-chain with any pay-TV providers’ set-top box allowing Xbox One users to control their linear TV through the console.
Both approaches have their merits, but I give the nod to Microsoft.
If Sony is able to cobble together sufficient programming to launch a viable linear OTT service it would indeed be a breakthrough. If it can get there before Intel and Google, who are pursuing similar ambitions, Sony could claim the first-mover advantage in a potentially exciting new business. And Sony’s existing installed base of hardware could give it the scale the negotiate more favorable per-subscriber rates from the networks than either Google or Intel. At some point, Sony may be able to use the projected revenue from a two- or three-year service commitment to subsidize the cost of new PlayStation hardware, building out the hardware base faster.
In the meantime, however, Sony could find itself paying out a huge amount of money to buy its way into a business whose basic economics are deteriorating. Sony’s strategy also puts it at odds with the incumbent pay-TV service providers, many of whom are also leading ISPs, whose broadband infrastructure Sony will need, both for its linear TV service and, increasingly, for delivering and supporting video games.
Microsoft’s strategy, on the other hand, is designed to make nice to the incumbent service providers, while sparing Microsoft the cost of licensing content for its own linear service.
While perhaps disappointing to those yearning to cut the cord it has the potential to pay dividends to Microsoft over time. As Janko pointed out over at GigaOM, for instance, TWC’s new Xbox app won’t count toward subscribers’ data caps. Instead, it will run as a “managed service” on TWC’s internal IP system.
“This is not an Internet service,” a TWC spokesperson confirmed to GigaOM. Sony’s linear-TV service on the other hand, certainly will be.
Apart from what that means for the linear TV service, though, by making nice with the service providers Microsoft may be able to use those integration deals to ensure that Xbox Live game play and downloads also don’t count against a user’s bandwidth cap. As gaming increasingly moves off consoles and into the cloud, the bandwidth implications could become a more serious issue. Should that happen, I’d rather be an Xbox than a PlayStation.