Opinion: Next-Gen's Media Problem

by Matt Helgeson on Sep 24, 2013 at 06:00 AM

Microsoft and Sony both have big plans to integrate a wide range of on-demand, live, and streaming entertainment into their new consoles. The problem is that these types of services won't be a big selling point for consumers in the next console generation.

Since Microsoft's May 21 Xbox One reveal event, which showcased the Xbox One enhanced TV and media abilities, it's clear that the definition of "game console" is changing. Xbox One allows you to Skype with a friend, watch a Netflix movie, keep tabs on a live soccer match, and play a game - all at the same time. The company is so committed to this instant switching between media apps that it specifically designed the Xbox One's OS to handle multiple apps at once, just like your laptop. It's even created a new studio division devoted to creating new entertainment and TV style programming, as well as hybrids like Remedy's Quantum Break.

While Sony has been enjoying the fallout from some of Microsoft's recent PR blunders and is dutifully portraying itself as the console maker that "still cares about games," it's also going all in on entertainment. Let's not forget that Sony, much more than Microsoft, is a worldwide entertainment company with substantial divisions invested in music, movies, television, and consumer electronics. You can bet that Sony will have every entertainment app that it can get its hands on, and confirmed it is adding more content with new partnerships with companies like Flixter and Redbox.

Sony is also venturing into content creation for its console. Though it was announced without much fanfare, Sony did say during its E3 press conference that it was going to create new entertainment content specifically for PlayStation Network through its Sony Pictures and Sony Music divisions. It's also going to keep expanding the presence and scope of its own Video Unlimited service.

In many ways, this is good news. If we can stop posturing about Microsoft for minute, let's all admit that Netflix Instant has been one of the greatest entertainment inventions of the past decade and I - like many of you - was introduced to it through my Xbox 360. I love it, so does my wife and my daughter. Having more options for entertainment on the next-gen consoles is great. However, I don't believe it's going to be, for most consumers, a factor in the decision to buy an Xbox One or PlayStation 3.

Let's look at the last few generations of hardware. From the very beginning, Sony recognized the potential of combining a game machine and other forms of media. The original PlayStation played CDs, a feature that I used a lot in the days before iTunes. The PlayStation 2 added DVD support, a format that was then red hot. The PS2 was actually a fairly affordable DVD player at the time, and came with the added benefit of being a game machine as well. For millions, it was an easy decision - the same goes for Blu-ray and PlayStation 3.

Microsoft benefitted from recognizing the power of streaming media (and its generally superior Xbox Live network structure), becoming the box that, for many of us, brought Netflix Instant into our living rooms. Once Nintendo got on board with the service, the Wii became a fairly low-cost option for many who wanted streaming movies on their TV. I know people who bought a Wii specifically for Rock Band and Netflix.

That won't be the case this time around. As my colleague Matt Bertz said to me the other day, "I'm pretty sure my toaster runs Netflix Instant." A friend of mine spoke to a developer at Netflix, and he said that the company has ported Instant to 300 platforms. That's platforms - not devices. The number of devices that run Netflix Instant runs into the thousands. Most TVs and Blu-ray players come equipped with "smart" functionality that allows them to access wi-fi and run apps like Netflix, Hulu Plus, and Vudu natively. Roku and Google's new Chromecast offer low-cost ways to get all the video content that you access through your game console to your television for a fraction of the price.

Microsoft is pushing toward further integration of television and live cable TV through the Xbox One's ability to interact with your cable box. However, one of the main reasons I canceled my cable was the fact that I spent so much time watching streaming TV through Netflix and playing games on my console. I know I'm not alone.

I suspect that Microsoft and Sony know this, and that's why both companies are pushing to create unique content. In Microsoft's case, it's also attempting new game/television hybrids like Remedy's upcoming Quantum Break. But here's the thing: Content creation is hard. The investment is huge, and the possibility of failure is high. Both companies have already learned this in game development. Netflix, which has done a pretty decent job so far, has experienced its ups (House of Cards, Orange Is the New Black, Arrested Development) and downs (Lillyhammer, Hemlock Grove).

At least Sony can rely on the talent it has in its other divisions; this is new territory for Microsoft. Frankly, I don't see either company building up a roster of "must-see" shows that inspire audience loyalty (and spending) like HBO or Showtime.

So, while I'm sure many will gladly use Xbox One and PlayStation 4 to access their favorite entertainment content, the systems will be just one of many devices in their lives that serve the same function. Being able to switch between live TV and Netflix is a cool feature, but not one that inspires me to spend hundreds of dollars. This time around, the fate of these next-generation consoles will be determined by one thing: the quality of the games.