Where is Sony? And Stretching the Imagination

Both Sony and Microsoft announced gesture related controls for their game consoles, yet if you read the popular press and scan some of the forums you will likely be bombarded by Project Natal and Milo. Just prior to E3 a rumor spread throughout the blogging world that claimed Hulu would find it’s way to the Xbox 360. Wait a minute…can’t you already watch Hulu on the PS3 through the built in browser? Yes, yes you can. So maybe the excitement surrounding, what would ultimately turn out to be a misinterpretation, is more related to Hulu’s stance towards “boxes,” rather than availability. Maybe…but I’m not convinced. 

 

The PS3 by most accounts is still the “powerhouse” of the game consoles in terms of hardware capabilities out of the box (naturally at a price premium). It included Wi-Fi from the start (no dongle required), “free” multiplayer gaming, HDMI, Blu-ray, a larger HDD, and backwards compatibility (without downloads). Yes the latter is no longer part of the PS3 hardware architecture and the new 360 now includes HDMI, but why does the 360 still seem to capture the headlines? 

 

Granted the installed base of Xbox 360 units is larger than the PS3 but is this alone the reason? Take for example Sony’s virtual world “PlayStation Home,” which is arguably the most ambitious of the social networking implementations on any game console thus far, yet it was met with a relatively lukewarm reception. Even if the content was lacking at launch the decision to create and support a virtual world was quite significant by itself. The possibilities for a virtual world revolving around all the facets of digital entertainment were mesmerizing. 

 

You could imagine virtual living rooms to watch movies, play games, chat/converse, virtual parties…and the list goes on. However Microsoft again is the company making news with community viewings of streamed Netflix content with avatars and voice chat – much like a virtual living room. UK and Ireland Xbox Live customers can also expect live sporting content from SkyNet – live TV for the US market is also reportedly in the works. All of this would seem to fit quite well in the PlayStation Home platform, given the support for personal spaces (e.g. apartments) and yet the PS3 owners are left looking through the window at the Xbox community. 

 

Perhaps this all boils down to exposure and focus. Even though Hulu is already viewable on the PS3 this ability isn’t highlighted on the PS3 home screen – nor is Home actively advertised from the main screen. It would also seem that Sony has taken a more game centric approach while Microsoft is expanding the spectrum of digital entertainment through the Xbox platform.       

 

And just for the sake of stretching my imagination let me throw this out there, might a day come when a company like Microsoft or Sony could become a global pay-TV operator? I know, sounds out there, but consider the possibilities – especially considering that a satellite channel (SkyNet) will be available to some Xbox customers (sans the dish). 

 

What if you could, as a subscriber, select and purchase a collection of channels that fit your needs – and coming way out of left field, not just local channels but channels from any supported region? As addressable advertising becomes more sophisticated the day may come when a live or near live feed in the UK, for example, could be streamed to the US with US centric advertising (think Beijing Olympics). Subscription and ad revenue could be shared with all parties within the value chain. In truth the revenue gleaned from international viewers is really consumer surplus that previously did not exist. In other words if a US consumer wished to see a non-domestically televised international soccer match he would have little recourse but to read about the results. We could go further and incorporate this with VOD while including the social environment. 

 

When we look at community viewing, a range of potential variable rate pricing schemes comes to mind. Just as movies on VOD platforms vary by quality (e.g. HD), newness, and release windows (e.g. available on VOD same day as DVD) the pricing for channel content could be dynamic as well. Let us presume for the moment a UK subscriber is viewing a UK pay channel but would like to share the content with a US based friend. In this case either party could be charged an additional “outside of region” fee. In addition caps could be placed on the number of potential “community” viewers, although for an extra fee additional allotments could be purchased (e.g. X dollars for every 4 additional viewers). This could be done on an À la carte system or subscription basis (e.g. pay additional monthly fee for X number of “out of region” viewers). 

 

Or if we’re talking about a VOD movie rental, pricing could also be contingent upon release windows as well. For instance in order for a UK viewer to see a movie prior to the official UK release window he or she would have to pay an additional fee. In essence we would be replicating something akin to Soderbergh’s Bubble that stepped outside the lines of traditional release windows. And why not? If a consumer is willing to pay X dollars more to access content ahead of time (or out of market), why not extract that additional value. 

 

One could argue against early DVD releases since an uncontrolled number of people could watch the movie without visiting the theater – then again what if the theater became the retail channel and only offered one DVD per valid theater stub? The pricing of the DVD naturally would be significantly higher than a typical DVD given a normal release window (again extracting additional value) and DVD theater availability could coincide when ticket sales start to wane. And while this version would probably leave out the special features, it might not be a significant detractor, especially if it means a family gets access to their child’s new “favorite movie.” 

 

I know this is outside the boundaries of the discussion but it’s just another example where new and potentially radical ways of looking at business models could bring additional revenue and align better to an ever increasingly on-demand society. In other words you can get the content sooner or outside your market, but you have to pay for the privilege.    

 

All of this would effectively make the virtual living room global - and despite it's global reach it would be a controlled envrionment.  At the same time, it would create new revenue streams that previously did not exist. But in the end this is pure fanciful dreaming since it would violate virtually every tenet and established agreement between operator and content holder – not to mention the infrastructure expense and logistical issues. Still it’s nice to think more science fiction every once in awhile as it lets us ponder what might be…