Game Consoles and the TV Industry

By CASBAA in Gaming 0 Comment
nick-binns

Matthew Kurlanzik

21st Century Fox

Director, Government Relations Asia

 

sushant-sharma

Sushant Sharma

Accedo

Business Development Manager

 The video gaming industry has evolved from a niche market to a multi-billion dollar a year industry over its two decades of history. While Nintendo has been among the first successful players, Sony and Microsoft have emerged as the other big players in the industry.Nintendo’s latest series of game consoles, Wii and Wii U, have clocked combined sales of over 100 million units to date worldwide. Sony’s PlayStation series (PS, PS2, PS3 and the latest PS4) has had an astonishing run and has sold close to 350Mn game consoles. Microsoft, the youngest player in the game consoles industry has sold close to 80 million Xbox game consoles (Xbox 360 and recently launched Xbox One). Considering there are about 1.5 billion TV households in the world, the game consoles user base is quite significant.Over the last 2 years, this industry has undergone rapid transformation. Although game consoles have added more computing power, enhanced graphics and better games which have translated into growth of their niche market among core gamers, the recent generation of game consoles havs added media streaming capabilities and has emerged as a viable alternative to Smart TVs, online media players, blu-ray players etc. A substantial user-base, powerful platforms, the explosion of cloud based services and increasing broadband penetration make game consoles a medium that the TV industry can’t afford to ignore any longer.

 

What has changed?

Over the last couple of years, consumers have been increasingly using their game consoles as streaming devices too. Having seen this trend, several leading players in the media and entertainment industry have started dabbling with this new medium to connect with consumers. Besides pure-play OTT players such as Netflix and Amazon, traditional pay-TV companies and broadcasters such as Verizon (Redbox Instant), Fox, HBO, Channel 4, Viasat, and Foxtel have embraced these game consoles as a medium to offer their content to consumers.Both Sony and Microsoft have taken a strict strategy to allow only online streaming (i.e. restricting the access to externally connected devices such as USB dongles). Among all major console manufacturers, Microsoft has shown the strongest commitment towards providing an integrated living room experience including gaming and video.“We set out to make Xbox One the all-in-one games and entertainment hub for your home. The one system that offers the best games next to the best entertainment experiences and apps.” Marc Whitten, Xbox Chief Product OfficerA look at Xbox One, the latest game console by Microsoft, reveals how Microsoft is positioning Xbox One as the hub of home entertainment.1. Xbox One Guide: Xbox One owners can plug their digital STB into their Xbox One and watch television through the console’s user interface. This is a compelling feature, providing a unified access to regular pay-TV programming together with apps sitting on the console. Switching to a channel is as easy as saying “Watch ESPN”! In addition, Xbox One allows gesture control to the same effect.xbox

Source: The Verge

xbox

 

2. “SmartGlass” for second-screen interactivity: A free to use mobile application that allows mobile apps to control the video experience on the big screen via Xbox. This is similar to the direction taken by Apple and Google via AirPlay and Chromecast respectively.

smartglass

 

Why should the TV Industry pay attention?

Target demographics

Game consoles users are typically the Millennial – young, Internet-savvy and more inclined towards consuming content over the Internet. This user base is also least likely to subscribe to a full pay-TV service. However, as their earning potential increases, over a period of time, these users can be converted into subscriber of a full Pay-TV service.

Game consoles can also be targeted at the “second TV” at home. Many households are unlikely to buy two pay-TV subscriptions but they can subscribe to a “mini-package” for the second screen.

Better experience than the STB

STBs provided by the majority of the operators are clunky and have a stone-age user experience. Game consoles perform far better on usability and performance in comparison with not just traditional pay-TV STBs but also in comparison to Smart TVs. Game console manufacturers are in a very good position to enrich this experience by extending content offerings, incorporating easy to use payment methods and great connectivity with Internet services such as online storage. Game consoles will be more attractive to a user-base who would choose a mid-tier pay-TV subscription and mix it with some OTT services.

Portable and Personal

Game consoles are “less mobile” than a mobile but more personal than a TV. As a result, it opens up a treasure trove of information about individual preferences and usage patterns which can be leveraged towards more personalized offerings.

 

What is the future of game consoles in the TV industry?

Several Technology and consumer electronics companies have shown commitment to building leading edge media streaming devices. These include Apple, Roku, TIVO to name a few. Other heavy hitters such as Amazon have joined the fray, not to mention the deluge of Android based STBs, dangling the promise of bringing thousands of apps onto the big screen. Among this hullabaloo, we believe that game consoles have a strong advantage as they have a huge and loyal user-base, as evinced by the sale of 1 million PlayStation 4 devices within 24 hours of launch. In the context of the TV industry, we don’t believe that game consoles will replace pay-TV since operators and broadcasters in each country have a better portfolio of content, understanding of the market and customer support. Having said that, broadcasters and pay-TV operators do need to connect with a market segment that might slip away from them. Game consoles provide access to this segment globally. On the other hand, game consoles have a delicate line to tread too. While they are venturing into a new territory of streaming media, they certainly don’t want to lose their core customer segment, which are the gamers. We do think that these consoles will become more powerful, allowing gaming and content to co-exist and at the same time will need partnerships with broadcasters and operators to enhance their content offerings.