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As the Xbox gave way to the Xbox 360, and Sony and Nintendo also brought out new hardware platforms (the PlayStation 3 and the Wii), Microsoft’s handling of its online service continued to distinguish it from its rivals. Unlike Sony and Nintendo, Microsoft was quick to embrace the idea of using its hardware to offer content from many partner sources, from games created by external developers to video from Netflix and Hulu. Recently, Microsoft announced a deal with cable providers such as Comcast and cable networks such as HBO to funnel pay TV through the Xbox 360 console instead of dedicated cable boxes.

Of course, Microsoft isn’t alone in combining television, movies, music, and Web content. Cable and satellite providers, television manufacturers, set-top box makers such as Roku, and Apple and Google are all now competing for a share of the digital living-room market. But thanks to the Xbox 360’s start as a video-game console, Microsoft’s 57 million console owners and 35 million Xbox Live members worldwide give the company a large established base of users to build on. Meanwhile, Apple and Google have struggled to sell their narrowly focused TV products (see “Searching for the Future of Television,” January/February 2011).

Now Microsoft is linking Xbox 360, its most successful consumer-focused brand, with others that have not been as well received. It is integrating Bing, its search engine, into Xbox and Xbox Live to enable people to search for multimedia content. By the end of the year, Microsoft is expected to unveil an updated Xbox Live design that is more in line with the look of Windows phones and the forthcoming Windows 8.

The future, says Microsoft’s Dennis, will involve seamless transitions between phones, PCs, and the Xbox: “You start a movie on a desktop or a big TV and finish it on a laptop, [or you] want to watch at your desk while you’re having lunch. We’re creating a media system [with pieces] that can all talk to each other.”

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Credit: Microsoft

Tagged: Business, Business Impact, The Business of Games

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