Entertainment Industry

Category: Microsoft

Microsoft: New music service on Xbox Live?

Zune Pass

Microsoft Corp. is reportedly rehearsing for the launch of a new digital music service for its Xbox Live platform and elsewhere that could be announced at E3, set to take place in Los Angeles in June. 

The possibility, first reported in The Verge, would replace the Zune Music Pass service that Microsoft currently offers in favor of a more versatile service that would be available on more devices and platforms, including Facebook.

A Microsoft spokesman did not immediately reply to a request for comment. 

Microsoft has worked hard in recent years to beef up Xbox Live, an online entertainment marketplace accessable via the Xbox 360 game console. The Redmond, Wash., technology giant has been adding movies, television shows and live sports events via agreements with Netflix, Comcast, ESPN and others.

But music has also quietly gained momentum on the platform. Earlier this week, the company forged a deal with Epitaph Records to stream an upcoming album from a Los Angeles punk band, Pennywise. Microsoft also offers Last.fm on Xbox Live.

Last month the Microsoft said that for the first time since the Xbox 360 launched in 2005, time spent watching videos and listening to music on Xbox Live eclipsed the amount spent playing online games. More than 20 million people pay for the premium Xbox Live service, out of more than 66 million Xbox 360 consoles sold.

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Xbox Live now used more for online entertainment than online games

Screenshot of Zune Pass music subscription service courtesy of Microsoft.

— Alex Pham

 

 

Xbox now used more for online entertainment than online gaming

HBO Go on Xbox Live

In a significant milestone for a device once known only for blasting "Halo" opponents, Microsoft's Xbox 360 video game console is now used more for watching movies and TV shows and listening to music online than playing video games online.

Microsoft has long attempted to use the Xbox 360 and its predescessor, the original Xbox, as a "trojan horse" that would use video games as a way to become the digital entertainment hub for families in the living room.

"The original vision for the Xbox was for it to be the heart of connected digital entertainment and it has been amazing to watch the arc," said Otto Berkes, a senior vice president of consumer technology at HBO who helped to launch the Xbox at Microsoft.

Yusuf Mehdi, who heads up marketing and strategy for Microsoft's Xbox business, said households now spend an average of 84 hours a month on the Xbox Live online service playing games, watching videos and listening to music. That's up 30% from a year ago. Just over half that time is spent on videos and music.

By comparison, the average household spend about 150 hours a month watching television.

"What we're seeing is that people are turning on the Xbox to play games and then keeping it on afterwards to get other types of entertainment," Mehdi said. 

Over the past few years, Microsoft has added number of entertainment applications to the 360, including Netflix, ESPN, Hulu, Vudu, and YouTube.

On Tuesday, it is adding new video applications from HBO Go, Major League Baseball and Comcast Corp,'s Xfinity on demand video service.

The additions bring the total number of music, television and movie services available on Xbox Live to 36.

The new applications require that users be paying subscribers to Comcast's cable service, the HBO premium network, or MLB.tv. Those who pay will be able to watch more than 2,400 baseball games or more than 1,000 of HBO programming, including every episode of its original series like "Game of Thrones," "Boardwalk Empire" and "The Wire." Comcast subscribers will have access to thousands of movies and television shows from a variety of channels via Xfinity.

The launch of HBO Go on the Xbox is a big step towards the premium cable network's digital on-demand service becoming a direct alternative to its linear channels. While HBO Go is available on computers and a variety of digital devices like iPads, Xbox 360 owners will be able to watch it on televisions. Previously, the only way to get HBO Go on a TV was via the Roku box, which is far less popular than the Xbox 360.

"The Xbox has an extremely broad user base that can deliver a rich visual experience, which is a pretty big differentiator," said Berkes.

More than 20 million people are paying Xbox Live subscribers who can access the console's entertainment services. A total of 66 million Xbox 360s have been sold worldwide.

Microsoft previously said it would launch HBO Go and Comcast's Xfinity on its console before the end of 2011.

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-- Alex Pham and Ben Fritz

Screenshot of HBO Go on Xbox Live courtesy of Microsoft. 

Microsoft beefs up ad sales efforts to better compete against big media

Microsoft wants to compete against cable TV
In its latest move to compete head-to-head with traditional media, Microsoft is beefing up its ad sales team.

The software giant, which is aggressively using its various holdings to establish entertainment platforms that compete with multichannel video programming distributors, has tapped veteran cable and broadcast industry executive Yoav Shahar as video specialist for Microsoft's video advertising unit.

Shahar, who spent 15 years at Turner Broadcasting in various ad sales positions, will be responsible for selling advertising for Microsoft's MSN, Xbox and Microsoft Video Network. Shahar said he sees similarities in Microsoft's push to what the cable industry did in the 1980s and 1990s in terms of taking ad dollars away from the broadcast networks. 

Microsoft is also still poking around Hollywood for a top programming executive who has relationships with key industry players. The company even has called some top executives describing its prototype candidates as people like Jeff Gaspin, the former NBCUniversal Television chief, and Peter Liguori, the one-time chief operating officer of Discovery Communications.

-- Joe Flint

Viewers watching more streaming video on game consoles

XboxNetflix
Video game consoles aren't just for gaming anymore.

Increasingly, people are using their Xbox 360, PlayStation 3 and Wii devices to stream movies and TV shows, according to a survey released Wednesday by the Nielsen Co.

Because all three consoles readily connect to the Internet, viewers can use them to access video-on-demand services like Netflix, Hulu Plus, YouTube, Major League Baseball Network and ESPN to watch on their TV screens rather than on small computer monitors.

And that seems to be just what consumers are doing. Streaming video accounted for 14% of the average time spent using Microsoft Corp.'s Xbox 360 in October, up from 10% a year earlier, according to a Nielsen survey of 3,000 people.

For Sony Corp.'s PS3, the share of streaming video was 15% this year, up from 9% last year. The shift was even more dramatic for Nintendo Co.'s Wii, which jumped to 33% from 20%.

Xbox and PlayStation users also spent an additional 5% of their time watching movies and television shows they paid to download, an option not available on the Wii.

That's good news for studios looking to make more money through digital distribution. Game consoles, along with the Apple TV, are the most popular ways to reach people who want to watch video on their high-definition televisions.

It's more troubling for television networks seeking to boost their ratings and ad revenue, however. The new data emphasize that consoles aren't stealing viewers' attention just with video games but also with content that serves as a direct substitute for traditional TV watching.

Game consoles have proved particularly effective for Netflix. An earlier Nielsen survey found that half of the users who utilize its streaming offerings do so on the PlayStation, Xbox or Wii.

Two of the consoles are also popular as DVD players. People spend 15% of their time on PS3s watching DVDs or Blu-ray discs. Sony's device is the only console that plays Blu-ray discs and is the best-selling Blu-ray player on the market. Xbox 360 users spend 9% of their time watching DVDs. The Wii does not play movies on discs.

Below is a Nielsen chart summarizing the survey results.

Nielsen Video Game Console Usage

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Photo: The Netflix interface on Xbox 360. Credit: Netflix Inc.

Microsoft adding new television content to Xbox game console

Xbox_TVXfinity_page
Microsoft Corp. is adding significantly more video content to its Xbox 360 game console, though it's not yet ready to replace the cable box.

The technology giant has reached deals with nearly 40 television distributors and content providers that will offer more TV shows via the Xbox Live online service by this holiday season.

However, with only certain channels and programs available, the agreements fall short of aspirations Microsoft discussed at the E3 industry conference in June of making its console an all-in-one entertainment device that could replace traditional set-top boxes from cable and satellite television services.

Moreover, users will still have to subscribe to traditional cable services in order to access much of their content on the Xbox.

The nation's largest cable TV distributor, Comcast Corp., said it would put its Xfinity service on the game console, allowing its subscribers to watch a wide variety of TV shows on demand. Telecommunications giant Verizon also will offer some live channels from its FiOS TV service.

And, premium cable channels HBO and Epix will allow subscribers to watch their movies and original programs on demand through the Xbox, as will NBC Universal-owned networks Bravo and Syfy. Internationally, the BBC will be available in the U.K.

Marc Whitten, vice president of the Xbox Live service, said the agreements expand the console's entertainment offerings. Some 35 million people use the Xbox Live service, which extends the gaming experience online and provides access to movies, TV shows and music.

Over the last few years Microsoft has made a wide variety of TV shows available to watch or rent and also added popular on-demand offerings from Netflix and ESPN.

Roughly 40% of the time people spend on Xbox Live is devoted to activities other than gaming, with video consumption up 300% from a year ago, said Whitten.

A new version of Xbox Live will be released in time for the holidays to allow people to use voice and gestures (instead of remote controls) to search for movies and TV shows with Microsoft's Kinect controller.

"What we're trying to do is change the way the content is experienced in the living room," Whitten said.

-- Dawn C. Chmielewski and Ben Fritz

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Photo of Comcast Xfinity on Xbox Live, which will give subscribers access to over 10,000 episodes of catch-up TV. Image credit: Microsoft Corp.

Google Inc. in preliminary talks to buy Hulu

Hulu_Video_Player_Page
Google Inc. is in preliminary talks to buy online video pioneer Hulu, people familiar with the situation said.

Hulu has begun meeting with potential buyers including Google, Microsoft Corp. and Yahoo Inc. to drum up interest in a sale, said these people, who requested anonymity because the discussions are confidential.

The presentations to the potential suitors are a first step as Hulu's owners weigh whether to sell the site after having received an overture from Yahoo.

Hulu's financial advisors, Morgan Stanley and Guggenheim Partners, set up the meetings with media, technology and communications companies.

The technology heavyweights are seeking to capitalize on the widespread popularity of online video and position themselves to reach the growing number of viewers who watch television shows, movies and short videos on computers, mobile devices and Internet-connected television sets.

Hulu's rights to the current season’s TV shows have drawn interest from Google and Yahoo, in part because these popular programs have attracted more than 600 advertisers -- including such major brands as McDonald's, Johnson & Johnson and Toyota. Indeed, the site expects to bring in $500 million in revenue this year from advertising and proceeds from its Hulu Plus subscription service.

Google, which has had a testy relationship with Hollywood, is making a major push to add professionally produced content to its mix of user-created videos on YouTube. It has hired industry veterans to help the Internet search giant make inroads and strike deals.

Yahoo is crafting its own strategy of bringing more premium content to its popular portal. Microsoft has had success offering access to movie subscription service Netflix Inc., dominant sports cable channel ESPN and the Hulu Plus paid offering to users of its Xbox game consoles.

Key to all three potential suitors are Hulu's licensing deals for popular TV shows such as “Glee,” "Modern Family" and Comedy Central's "The Daily Show with Jon Stewart." The lure of these top-rated programs quickly vaulted the 3-year-old service to among the top destinations for online video, with some 28 million monthly viewers, according to the measurement firm comScore.

Two of the media companies behind the online video service, Walt Disney Co. and News Corp., recently renewed licensing agreements to make Hulu more attractive for a sale. Comcast agreed to give up NBCUniversal’s management control in the venture to get approval for its acquisition of a majority stake in the media conglomerate. Comcast is required to provide programming to Hulu on the same terms as the other owners.

But the new agreements may include provisions that would require users to prove they're paying cable or satellite TV subscribers before they can watch current episodes of shows one day after their initial airing. Otherwise, they would be forced to wait.  The agreements would remain intact if Hulu is sold.

A Hulu spokeswoman declined to comment. A Microsoft spokeswoman could not provide immediate comment. Google and Yahoo could not immediately be reached for comment.

A sale would allow Hulu's media owners to make a graceful exit from a service whose success nonetheless created friction with traditional business partners. Cable and satellite distributors complained about paying for the right to carry programs that Hulu offered free online. A transaction would also enable owner Providence Equity Partners, which put $100 million in the venture, to see returns from its its investment.

Janney Capital Markets analyst Tony Wible said he expects Hulu’s owners to seek the same valuation for Hulu that Netflix commands from investors, about $2 billion. Hulu earlier scrapped an initial public offering that some investment bankers said could have valued the company at more than $2 billion.

Technology companies may be willing to pay a premium to get the kind of original content that draws advertising from major brands, said Andy Hargreaves, an analyst with Pacific Crest Securities.

But Arash Amel, research director for digital media for IHS Screen Digest, says he isn’t sure how much of a premium. Google, Microsoft and Yahoo are not buying Hulu’s technology, so they would risk paying through the nose for shows when content deals expire, he said.

“If you had those deals for 10 years, OK, you have time to build a business,” Amel said. “But look at what they are trying to do to Netflix. They help you until you are successful then they want most of what you make or they try to kill you.”

-- Jessica Guynn and Dawn C. Chmielewski

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Photo: Hulu screenshot showing Stephen Colbert of Comedy Central's "The Colbert Report." Credit: Hulu

E3 2011: Microsoft sells Kinect to hard-core gamers

E3GhostRecon
A year after launching its motion- and voice-sensing device with a focus on dancing and fuzzy animals, Microsoft Corp. is marketing Kinect to hard-core gamers.

At its E3 press conference Monday, Microsoft showed off a number of upcoming action and adventure titles aimed at avid young male players that take advantage of Kinect's unique features. They included Electronics Arts' Mass Effect 3, in which players can verbally issue commands to computer-controlled colleagues; Ubisoft's Ghost Recon Future Soldier, in which players can put together unique guns and fire them by moving their hands; and LucasArts' Kinect Star Wars, in which players can live out their dreams of using the Force like Luke Skywalker.

There were a few Kinect games for more casual players, such as one featuring Sesame Street characters and a sequel to last year's hit Dance Central. But most featured guns, knives and light sabers.

Microsoft's focus was part of a broader trend at the show: After a few years of going after non-traditional players such as women, older adults and young children, video game companies are refocusing on their core audience of young males. "Casual" gamers cut back spending last year, leading to a huge drop in sales for Nintendo's Wii and Activision's now-defunct Guitar Hero brand, and shifted their attention to less expensive or free games for Facebook and smartphones.

As a result, companies such as Microsoft are looking for young men -- who still eagerly buy new installments of hot series like Call of Duty, Uncharted, and Halo -- to spend more money.

“We skimped a little on the core [audience] with Kinect last year,” Xbox president of global marketing Michael Delman said in an interview. “We expect to see their usage go way up.”

-- Ben Fritz

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Photo: Ubisoft CEO Yves Guillemot shows off Ghost Recon Future Soldier for Kinect at E3. Credit: Ricardo DeAratnha / Los Angeles Times

E3 2011: Microsoft wants XBox 360 to be a television box without a remote

E3Microsoft
Microsoft Corp. is looking to put its video game console front and center in the television business.

Monday morning at the Electronic Entertainment Expo video game conference, Microsoft showed off a new feature on its Xbox 360 console: remote-control-free television navigation. The demo showed the 360 console being used as a set-top box to watch live TV as well as to record programs via voice commands. It used Kinect, the voice- and motion-sensing accessory for the console that Microsoft launched last year.

In a follow-up interview, Michael Delman, head of global marketing for the company's video game division, said Microsoft is in talks with "more than 80" content provider, including cable and satellite television providers around the world. Subscribers would be able to access all of the networks they pay for through the Xbox 360.

Microsoft already has television partnerships for the Xbox 360 with Sky TV in Britain, Canal Plus in France and FoxTel in Australia. It has never offered TV in the U.S.

With an increasing number of televisions connecting directly to the Internet and more online video devices like the Apple TV, competition for real estate in the living room is becoming increasingly fierce. Microsoft is hoping its video game console can win that battle by evolving into an all-in-one entertainment device.

Other entertainment services have proved very popular on the Xbox 360, particularly Netflix streaming. Delman said that 40% of online activity on Microsoft's console is now entertainment activities other than playing video games.

Microsoft also announced that it will soon make YouTube videos available on the Xbox 360.

-- Ben Fritz

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For the record: A previous version of this post said that Microsoft was talking with 80 cable and satellite providers. A company spokesman clarified that the figure also includes potential content partners.

Photo: A demonstration of online media features for the Xbox 360 console at Microsoft's press conference during E3, the Electronic Entertainment Expo, in Los Angeles. Credit: Reicardo DeArtanha/Los Angeles Times.

Online movie downloads up nearly 40% in 2010, surpassing TV sales for first time

U.S. consumers spent $385 million buying and renting movies via the Internet in 2010 --up 38% from the year before -- surpassing for the first time the amount paid for online television shows.

According to research from IHS Screen Digest, the market for Internet television episode rentals and purchases last year was $366 million. In 2009, spending on online movies and TV was $280 million and $295 million, respectively.

The shift reflects the growing number of ways consumers can access movies through devices such as video game consoles, set-top boxes and the iPad at the same time that Hulu and other free streaming websites make it less appealing to pay to download TV shows.

The growth of the digital market came amid an overall downturn for the home entertainment market last year, with revenue down 3% to $18.8 billion and sales and rentals of traditional DVDs down 11% to $14 billion.

2010 also saw increasing competition in the digital movie market, as the grip of Apple Inc.'s iTunes slipped and other rivals, most notably Microsoft Corp., gained market share.

iTunes' market share dropped to 64.5% from 74.4%, according to IHS Screen Digest, while Microsoft, which sells and rents movies via its Xbox 360 video game console, grew to 17.9% from 11.6%.

Movie downloads on Sony Corp.'s Playstation 3 game console were No. 3 at 7.2%, up from 5.7% in 2009.

Vudu, which was acquired by Wal-Mart Stores Inc. last February, relaunched in November and entered at  No. 4 in the market, according to IHS Screen Digest digital media research director Arash Amel.

The other major competitor in download-to-own and video-on-demand movies is Amazon.com. The online retail giant is currently preparing to launch a subscription streaming service that would put it into competition with Netflix Inc. That model has proved more popular with consumers than paying for individual movies, as evidenced by the breakout success of Netflix.

Although there are no industrywide charts for digital downloads, Apple reported in December that the most popular movies of the year on iTunes were, in order, "The Hurt Locker," "The Twilight Saga: New Moon," "Hot Tub Time Machine," "Iron Man 2" and "Zombieland," according to CNET News.

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Video games suffer second slump in 2010 as players curtail spending

Kinect Adventures

If the video game industry were an arcade game, you would be hearing the disappointing bloops that signal the player to try again.

For the second year in a row, U.S. video game sales posted a decline, down 5.7% to $18.6 billion in 2010 from $19.7 billion in 2009 and $21.4 billion in 2008, according to a report released Thursday by the NPD Group.

Both consoles and games took a walloping for the full year as consumers curtailed spending in an uncertain economy. Console sales fell 12.5% to $6.3 billion in 2010, and software sales fell 5.6% to $9.4 billion.

"Hardware sales were down 12% in units for the year, likely due to no price cuts and the continuing recession," said Michael Pachter, an analyst with Wedbush Securities. "And the decline in hardware drove the decline in software sales."

One bright spot occurred in a category that is often overlooked -- video game accessories, which in years past included extra game controllers, dance pads or keyboards. This year, however, accessories took off, gaining 13% to $2.9 billion as Sony introduced its Move motion controller for its PlayStation 3 and as Microsoft began selling its Kinect controller for the Xbox 360.

Kinect also fueled sales of the Xbox 360 in December, some of which came bundled with the new motion-and-voice-sensing controller. Xbox 360 sales jumped 42% to 1.86 million units in December, from 1.31 million in December 2009.

Sales of Nintendo's Wii, however, suffered a 38% dive to just 2.36 million units in December, down from 3.81 million a year earlier. Sony's PS3 also declined, albeit less precipitously. It sold 1.21 million PS3s in December, down 11% from 1.36 million.

With the exception of the Xbox 360, declining console sales will put pressure on manufacturers to lower the price, particularly for the Wii, which sells for $199.99 and is rapidly losing steam, analysts said.

"The Nintendo Wii business looks increasingly like a gift purchase business, which means they will have to have a price cut in order to sustain it during non-gift-giving seasons," said John Taylor, managing director of Arcadia Investments.

-- Alex Pham

Photo: A screen shot of Kinect Adventures for Xbox 360. Credit: Microsoft.

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