The battle-lines for the war over which companies will provide the infrastructure for broadband digital entertainment content piped into the home are being drawn, as reports about Microsoft Corp’s X-Box console project resurface. As we reported in September, the company is preparing a games console based around hardware from Intel Corp and Nvidia Corp for launch late next year, in time to compete with new consoles from Nintendo Co and Sony Corp. However, the scope of Microsoft’s X- Box project could easily encompass providing films, music and video – as well as all the attendant data services – to the home, through its links with cable companies across the globe.
The X-Box will doubtless function as a games machine and grab a slice of that $15bn market. I have no doubt that Microsoft has ambitious designs on the games market, said Nick Gibson, analyst at Durlacher Research. However, Microsoft, Sony, Nintendo and Sega Enterprises Ltd are all looking at their new consoles as advanced set-top boxes – often including home networking functions – which will serve as home gateway to a whole range of broadband services. It looks like [Microsoft] are preparing a hardware tool to fight the next generation games console/internet console/set-top box battle, Gibson said.
In such a battle, links with cable companies could prove crucial, Gibson says. And Microsoft is well positioned to capitalize on existing stakes in Comcast Corp, Time Warner Inc’s Roadrunner cable service and NTL Inc. Yesterday, Microsoft agreed to pay $2.97bn for the 30 % stake in UK cable operator Telewest Communications Plc it is acquiring from MediaOne Inc.
However, the other console manufacturers are all well aware of the possibilities inherent in their new boxes. Nintendo has said that it sees its Dolphin machine as more than a console. Sega has inked wire-line service deals with AT&T in the US and BT in the UK.
However, Sony Corp may hold the best cards in the post-PC pack. In 2001 it will launch a digital distribution venture, called e- Distribution, which will distribute games software, music and films via broadband cable TV networks.
