Will Xbox’s 720 Be Subsidised By Cable Companies?

Microsoft is transitioning the upcoming Xbox 720 from a dedicated gaming machine to a content powerhouse that could be subsidised by cable companies.

As it stands, the Xbox console is the lynchpin in Microsoft’s living room strategy. The 360 is not only a successful gaming device, spawning unparalleled facial and motion recognition technologies (Kinect), it’s also a content-savvy system that unifies entertainment with the ubiquitous Windows platform.

The next generation Xbox will up the ante by making the Xbox more sociable with Windows 8 smartphones, tablets and PCs, but to position the Xbox as a go-to entertainment console, it needs engaging content.

Wedbush Securities analyst Michael Pachter has predicted the Xbox 720 will be subsidised by at least one cable TV company in exchange for a subscription contract. Cable TV providers will broadcast their content over the internet via the box, much like the Xbox 360 streams Foxtel.

Patcher addressed X360 Magazine regarding the dedicated console’s transition into across-the-board entertainment machine.

“It’s pretty clear to me that Microsoft intends to allow the Xbox 720 to function as a cable TV box,” Pachter began, “allowing cable television service providers to broadcast over the Internet through the box, with SmartGlass as the remote controller, and with the Xbox 720 using Windows 8 to split the TV signal into multiple feeds, allowing consumers to divert different channel feeds to different displays within the home.”

Patcher believes offering the Xbox 720 on a bundled contract with a cable/satellite TV provider is a model more profitable than outright purchases, much like the $99 Xbox 360 bundle being sold in the US at present.

“I think this is the biggest part of the next launch,” Pachter continued. “It will allow Microsoft to participate in the cable TV monthly subscription. There are 85 million households in the U.S. with either cable or satellite TV, and if Microsoft could sell half of them an Xbox 720 and collect a $5 monthly Xbox Live Gold fee from each of them, we’re talking huge profits.

“This suggests to me (along with the current $99 Xbox 360 financing plan) that Microsoft will seek to get a cable TV provider to subsidize the cost of the box, meaning that we might see an Xbox 720 for $99, if the customer commits to a cable TV subscription for two years.”

Microsoft’s current Xbox is being offered on a 24 month contract with a Xbox membership only in the US, but the model was introduced late into the Xbox’s cycle, indicating Microsoft may be trialling it before it takes the gamble with a new console in other countries.

Unlike other analysts who predict the next generation Xbox will make its debut in 2013, Patcher believes the Xbox 720 will make its debut in 2014, acknowledging Microsoft would miss out on the Christmas sales.

Source: X360 Magazine