At a press event this afternoon, Microsoft unveiled the latest iteration of the Xbox, known as Xbox One. In their remarks, company executives referred to this as "the beginning of truly intelligent TV." So, is Xbox One the future of OTT? Here's my take:
Microsoft is doing a few notable things with Xbox One. First, the company is staking a more significant claim in the living room. Xbox One seems to be much more of a living room console than the current Xbox 360; it's more comprehensive than Roku, and it will come to market before Apple has made any major announcement in this space.
Second, while Microsoft is not eschewing the die-hard nature of their gaming customers, its executives are clearly positioning this as an "entertainment" console, and not a game console. Ultimately, Xbox One as a comprehensive entertainment solution could be awesome, or it could massively backfire. Nintendo did remarkably well with the Wii when it was first released by targeting casual gamers instead of die-hards. Conversely, SONY went the other way with the PS3, making a much more capable (and much more expensive) hard-core game console. Both are considered successful in terms of units shipped (roughly 100 million and 80 million, respectively). Microsoft on the other hand started Xbox as a game console, and learned along the way that it is a capable living room device (also selling about 80 million units); however, Microsoft also has a long history of failing in the living room, dating back to WebTV.
The thing I'm most curious about is the "HDMI in" capability which seemed to capture much attention. This is what lets you watch traditional pay TV (i.e., cable or satellite) without switching inputs. If it's done correctly, the Xbox can become the primary input to your TV, and this can really shift the tide in Microsoft's direction for ownership of the living room battle.
But, there are problems. On the Xbox One itself, it appears you will have access to a great set of entertainment apps: Netflix, Hulu, and custom apps from other content providers. When you "switch" to the cable box, though, where does the functionality lie? Am I using the cable company's DVR? If so, why? Doesn't the Xbox One have tons of storage space? Why would I pay that cable company another $10 per month? What about other cable company features such as on-demand? Who am I paying for that movie? Perhaps we'll start to see the advent of cable company "apps" for the Xbox -- where you're paying for the service from the operator, but it's all being delivered through Xbox, and the cable company set-top box goes away. Or maybe Microsoft becomes a virtual "cable operator" themselves, making content licensing deals with networks and owning the direct viewer relationship with you through your Xbox Live Gold account. They've taken a provocative step, but Microsoft has raised more questions than answers with this announcement.
Another area where I think Microsoft could potentially implode with the Xbox One is with the overall user experience. While gaming on the Xbox 360 is great, as are the handful of entertainment apps, the process of setting up and signing up is brutal. You need an email address to get a Microsoft account, and a Microsoft account to get an Xbox account, and then an Xbox account to get an Xbox Live account, and an Xbox Live account to get Xbox Gold--which is really the only way that you can do anything online. And if for some reason you need to change one of those accounts, you'll need to petition the U.S. Congress (kidding--kind of).
Lastly: voice control. This is an elusive one, and I don't think the capabilities are truly there yet (anywhere). I've not found a voice controlled system that is reliable enough to be useful. My car understands my son, but not me. Google Voice translates my voice messages into text--but not legibly. Even Siri is fairly fallible. With different accents, colloquialisms, tonal differences, inflections, and volumes, I can imagine the living room being a war zone, where people's "new relationship with their TV" has them screaming at it in frustration.
There's certainly more to come on this; as Microsoft consistently mentioned during the press event, the company will be sharing more details at E3.