CES 2007 - Part II: IPTV on Xbox 360, iPhone and DTX

TV is Changing

As we've mentioned before, the end game of convergence is pretty straightforward: access to all of your content, anywhere on any device.  In the early days of multimedia computing, all of your music and video content was stored on CE devices.  Cassette players gave way to CDs, VHS to DVDs, and of course there was always cable TV.  As PC technology grew faster and smarter, content began shifting from CE devices to PCs.  From MP3s and DivX movies to Youtube, some of the most used content these days can't even be played on run of the mill CE devices. 

Microsoft's approach plays out like this; you get content on the Internet through your PC, which is most likely running a Microsoft OS.  But the chain continues now with the Xbox 360, which can stream content from your PC to your TV.  Currently Microsoft limits the type of content you can stream from your PC to the 360 (it has to be WMV encoded), but there are 3rd party apps that will transcode from virtually every format to WMV for streaming to the 360. 

Xbox 360 users also have the option of downloading content off of the Xbox Live Marketplace, which as of the end of last year includes renting full length movies and buying TV shows.  As a game console, getting this content on your TV is as simple as downloading it. 

The final frontier for Microsoft however is attempting to control the cable TV market.  The PC market is already pretty much dominated by Microsoft, and the next-generation console race has left the Xbox 360 in the lead, leaving the TV/CE side of things untapped.  Microsoft has tried to break into the TV market in the past, with things such as Ultimate TV, but success by Microsoft's standards hasn't been in the cards.  With the possible transition to IPTV however, Microsoft feels that it has potential to control a big chunk of the market. 

Being able to control the platform which TV is delivered is most of what Microsoft's Xbox 360 IPTV announcement was about at this year's CES.  The idea is to leverage the current installed base of Xbox 360 consoles as potential customers for IPTV, which makes providers happy and gives Microsoft the marketshare it wants.  The final piece of the puzzle works like this: content that would normally appear on cable networks is delivered on an IPTV network (e.g. Verizon FIOS or AT&T U-Verse) to the Xbox 360, which then obviously ends up on your TV. 

At CES, Microsoft gave us a demonstration of the upcoming Xbox 360 IPTV solution which is supposed to be released sometime in 2007.  Enabling IPTV support on the 360 will be as simple as a software update that will add a Television button to the Media blade in the 360's UI. 

The 360's IPTV software is no different than Microsoft's current IPTV software, meaning it doesn't look like it's integrated with the 360's look and feel too much.  Launching the IPTV software takes a few seconds as it authenticates your hardware and account information, but afterwards it's a fully functional set-top box. One of the most tangible benefits of an IPTV solution is extremely fast channel switching, much faster than current digital cable offerings; Microsoft's IPTV implementation both on set-top boxes and the Xbox 360 can switch channels in 300 ms.

Microsoft's IPTV Interface launching on the 360

The goal here isn't to require Xbox 360's for each TV that you want to watch your IPTV on, but rather let you use your 360 as a set-top box if you happen to have one.  The 360  will function as a HD-DVR, recording at least two streams simultaneously.  You'll still be able to record a program and play a game at the same time, and while watching TV you still have access to your friends list and all of the other Xbox 360 navigational tools.  Microsoft's demonstration was seamless, you couldn't tell that the IPTV software was running on a Xbox 360 until you hit the Xbox button on the remote control. 

We asked Microsoft if you'd be able to use the 360 as a IPTV receiver even if the provider wasn't in your area, thereby introducing a significant amount of competition to the fairly monopolistic cable market.  Unfortunately, IPTV networks are designed to be managed networks, not simply video over the public Internet network, and thus your IPTV traffic will flow entirely within your ISP's network.  In other words, your IPTV provider needs to be in your area in order for you to get service.

Like any other cable TV service, there will be a cost associated with the Xbox 360's IPTV, but we'd expect it to be competitive with other options.  At first glance the technology sounds cooler than it actually is, after all, your 360 ends up being nothing more than a cable box at the end of the day.  But the real story is in what it turns your Xbox 360 into - a true media hub in your living room.  With IPTV support, the Xbox 360 would be able to play any content, whether it's on a TV network or on your PC, on whatever it's hooked up to.  It all but completes the digital home; taking that DVR'd content with you on the go would be the next step.