Xbox One and the Future of the Digital Living Room

on May 21, 2013

When I started my career as an industry analyst in 2000, my focus was on the video game industry and the digital living room. We had a belief that at some point in the future rich media and entertainment would collide and set the norm for living room multimedia and immersive experiences. Today with the unveiling of the newest Xbox generation, called the Xbox One, Microsoft has taken another step closer to this vision.

I’ve closely observed each major console announcement since 2000 and at each and every one there was a clear and focused message: this console was first and foremost about a great gaming experience. No longer is that the message. Great gaming experiences are simply assumed. They are the new normal and expected. The question that consoles need to address in order to evolve and appeal the wider audience necessary for broader adoption is: what else can you do for me?

Microsoft spent not only the introduction of the Xbox One but the vast majority of the presentations emphasis not on gaming, but on the what else can you do for me. This is very telling. Not just about where we are as an industry but Microsoft’s living room agenda at large.

I’ve long said, and I’ll continue to state that I believe Microsoft’s best asset to build upon and around is the Xbox. It is, arguably, the strongest and most relevant consumer brand they own today. It is also the strongest from an ecosystem standpoint, and the one I feel they need to build out from with regards to personal computing.

Of course the Xbox One will have amazing games, and I for one am extremely excited about that aspect. But, the most interesting parts of the unveiling were not the graphics, or games, or even the exclusive titles. The most interesting announcements were the OTHER exclusives.

Exclusivity is No Longer About Game Titles

We have a name for exclusive games. We call them platform drivers. The first Halo on the first Xbox was a platform driver. It was the single greatest selling point for that generation of XBOX hardware and it was exclusive to the Xbox. Many other top-tier titles were born as Xbox exclusives and its continued demand and strong sales were tied to those exclusives regardless of whether they stayed exclusive. It was almost always Xbox first or Xbox only with many top-tier franchises. To be fair Sony has many of their own, but the elusive hard-core gamer between the ages of 18-35 seemed to generally gravitate to the Xbox and the exclusive titles that drove the Xbox experience.

Today, however, Microsoft discussed exclusives of a new kind. Of course there will still be exclusive games, but now games are not the only exclusive content Microsoft appears to aggressively going after. Exclusive TV series, and network deals with the NFL, along with unique interactive content with SportsCenter were key parts of this announcement. I get the feeling that Microsot hopes that unique content of this kind may drive platform adoption the same way exclusive titles have in the past.

We keep wondering when our set-top boxes will break free from the mercantilist nature of our cable and TV programing companies. My thoughts on this is that we are simply waiting for an Internet only, or over-the-top-service only, blockbuster success. If that happens we will almost certainly see a paradigm shift. Perhaps Microsoft with the Xbox One will be the catalyst to drive this paradigm shift and create a true leadership position in the digital living room.