In no particular order…

1. The new controller is pretty cool but didn’t get much love today. It is smaller and sleeker than the Xbox 360 controller, close to the same battery life, and has something like 40 improvements. The biggest and best? Vibration feedback was added to the finger tips, in addition to feedback in the palms. It made for great hands-on demo, and will be a GREAT add-on feature for games such as Call of Duty or Forza. Think about a machine gun rumbling….or pounding the breaks racing around a corner. Trust me – #HighCoolnessFactor.
2. Hmmm, working with cable and satellite services, sort of. The good potential news for consumers is they will be able to take the HDMI output from their satellite or cable box and run it into Xbox One, and then onto the TV. (Microsoft didn’t explicitly name that it would work with everyone, but a good working assumption by me.) You then use the Microsoft electronic programming guide using a remote, or gesture-based, or voice commands to navigate to channels. #PrettyCool.
   The rub? If you’re a TV service provider, you just lost your advertising in your own EPG, and it’s unclear how all the on-demand content offers will be passed through (or not) into the Xbox One guide. It can’t make a company such as Comcast very happy, but…I suspect this is not the last we’ll hear about this topic. #MoreLikelyComing
   Further, imagine if Microsoft offered a cloud DVR service? Hmmmmm. #JustWondering. Or, if Microsoft had a conditional access card slot? #StillWondering.
3. The quick switch between “apps” is pretty cool, and updates in the background is a nice fix. These are small things, but annoying things with the current Xbox 360. It’s nice to see fast switching, and it was interesting to hear how Microsoft is using three different operating systems to make the box work. #GotThisRight
4. Hey – it has a Blu-Ray drive! This news got about 1.8 seconds on stage (how quickly can you say “Blu-ray drive”?). Funny concept – Microsoft paying Sony royalties (or the Blu-ray group). It took eight years to correct after the failed HD-DVD choice, but Microsoft in intent on reducing friction points for consumers to enjoy their media. #CreditForChanging.
5. There are a ton of things to do on the Xbox One with Xbox Live. Truth is there are a ton of things to do on the Xbox 360 with Xbox Live. Bing. Skype. Movies. TV. Music. Games. They look cooler, faster, simpler. Will it be enough to get people to buy a new console? #TimeWillTell
6. The Halo Live Action TV series could be cool. Bonnie Ross and cohorts at 343 have been doing fun and interesting things with the Halo franchise and the TV extension is a neat move. The Spartan Ops episodes have been a great tool to keep interest up and satisfy enthusiasts for more back story and related missions. They arguably haven’t gotten enough positive attention, and the TV series could be either a) a good new experiment or b) a huge home run for Microsoft.
   There are definitely enthusiasts out there and I joked on Twitter about my son trying to DVR the new TV series tonight—but I wouldn’t have put it past him trying even though the series is likely months and months away. #OnePerspective
7. Most impressive stat? Microsoft will soon have 300,000 servers running supporting Xbox Live.  It sounded like a big number. It is a big number. And before anyone asks, I don’t know how many Google has, Amazon has, or Apple has. Or Facebook has. #DontAsk #EasilyImpressed
8. This press conference was waaaaay different than the Sony presser a few months back for the PS4. And, the fun part? E3 is now just over a few weeks away, and while Microsoft will now likely focus on heavy game content for Xbox One (and still some for Xbox 360), Sony will likely focus on games, but much more time on entertainment and services. #TheTablesFlipAgain.
9. Microsoft will continue a two-SKU strategy with Xbox 360 and Xbox One. This is a break from the Xbox to Xbox 360 transition when the Xbox support was dropped seemingly overnight. However, this time, there are 75MM Xbox 360s compared to 24MM Xboxes at the time, and Microsoft will continue to milk the profitable long tail of the Xbox 360 cycle.
   The fly in the ointment may come, however, from third-party publishers. While they will likely still support the Xbox 360 for a bit, programming for an Xbox One game is materially different, and hard choices will be made on a per-franchise basis as to if they make two (different) versions of a game. This will make for a bumpy transition for publishers in holiday 2013 and 2014. #ToughChoices
10. No pricing, dates and – whoops. This isn’t a surprise at all. They had to hold back some details.  Only note? Xbox One was described as a “premium” console. #NotCheap #Not$299 #BadExpectationsBySome

That is the date that the email arrives in your inbox. You open it. It reads: Microsoft proudly invites you to attend a special event on Tuesday, November 5 in Seattle… The email then has some coy hints about infinite scenarios involving entertainment, devices, games, and the “future.”

As next week will show, Microsoft is an extremely important inflection point as a company, and with increasing pressure from Sony, but more importantly, Apple and Google, Microsoft is compelled to speak. We just think this is a huge opportunity missed—with good upside to surprise everyone about a new phase of Microsoft as it moves to beyond the desktop.

• • For the PDF version, click HERE:DWR If Microsoft shut up MAY 2013

1. What Sony actually said
2. What Sony hinted at
3. What Sony didn’t say

The first part, What Sony actually said is simple and was pretty widely covered last night, so I’ll skip re-hashing it save one point: it was clear that Sony is trying to establish that the PS4 console will be for the core gamer. This theme played well last night with a good lineup of first-, second-, and third-party games.

The second part? Much more interesting, including:

• Hinting at some of the capabilities coming from Gaikai. My sense from last night is that this is a pretty big work in progress. Typical console launches mean that launch titles look nice, but the developers haven’t figured out how to fully take advantage of the capabilities of the hardware and software architecture. Games that come in the second holiday after launch are typically much better overall games, with few notable exceptions. This means that the real coming out party for Gaikai integrated features is likely Holiday 2014.
• Hinting at connected devices to control the PS4. It was hinted at but not discussed likely as to not detract from the core gaming theme. It was a bit strange to see the PlayStation Vita being shown, but at some point, Sony will reveal more about what its version of connected platforms means. There are three likely scenarios: 1) all devices simply connect to a cloud service, 2) Sony branded devices such as an Xperia phone or tablet interact with a PS4 or Sony TV courtesy of a vertical software stack, or 3) Sony opens up the APIs and comes up with a PSN app for iOS and Android devices.
  The third scenario is the most beneficial course assuming Sony wants to change the way it traditionally works, but that would require a significant cultural shift within the organization.
• Hinting at capabilities of the stereo connect bar. A picture of it was shown last night, but little was discussed. The new Kinect sensor bar and voice commands will likely be a key tenet for the Xbox Durango, and Sony likely wants to avoid any early direct comparisons. Hence, they acknowledged they have a bar, but didn’t provide any color. This is now likely an E3 demo topic.
• Hinting at enabling free-to-play gaming. Sony has been quietly putting the pieces into place to enable F2P, and the micropayments reference on stage likely means more news on this at E3.

That leaves the third part of the analysis — What Sony didn’t say.

• No picture of the box, and almost by default, no confirmation of the Blu-Ray drive. The eventual plan of full digital downloads remains just that—a plan, and not reality. The “last mile” issue of Internet penetration with adequate bandwidth remains the choke point to not being able to move strictly to full downloads for games. Hence, a disc-based media solution is still needed, and Blu-Ray is the logical choice. This problem is not unique to the PS4 – the WiiU has an optical disc drive, and so will the Xbox Durango.
  Not talking about the Blu-Ray drive gives critics one less bit of ammo, and it avoids placing doubt in consumers’ minds that the PS4 is not a big enough leap to upgrade since it is still using the same Blu-Ray drive as the PS3.
• No discussion of other media, services and entertainment such as movies or music. In hindsight, this is understandable given the goal of going after core gamers for the evening. This means likely more on services at E3 in June in Los Angeles.
• No mention of much casual gaming content. The messaging for the evening was focused on the core gamer, and Sony wanted to re-ignite its core base first and foremost. There will be plenty of media cycle opportunities between now and launch to broaden the audience.
• No mention of the words “Electronic Arts” or “Madden” or “John Riccitiello”. Huh. So the PS4 launch marked one event – arguably the first platform launch that didn’t initially involve EA. Heck, EA was a launch partner for the doomed Nokia N-Gage and the Tapwave Zodiac – but was not on stage. Technically, EA was one of nearly 80 developers all jammed onto one slide as an icon, but still…what happened?
  Most platform launches check all the required content boxes: First-person shooter? Check. Racing? Check. Role-playing game? Check. Casual? Check. Sports? Nothing. That is usually EA’s bailiwick.
  The only issue I can even think of, and have no data to support it, is a potential brewing conflict between EA’s Origin service and Sony’s PSN, including Gaikai. There is plenty of historical precedent to support this – Microsoft had issues with some of its key partners when it launched Xbox Live, and even Facebook and Zynga have had issues as Zynga has launched its own Zynga.com initiatives.
  Of course, it could be something simpler, and we’ll see EA up on stage with Sony at E3 in June.

So the good news for consumers is that the advancement for next-gen video game consoles will likely take a giant step forward next Wednesday in New York City. Or will it?

Sony is widely expected to announce its successor to the PlayStation 3 video game console. This anticipated news follows the launch of Nintendo’s recent entry, the Wii U, which has stumbled a bit after a decent launch last November.

The next-gen Xbox Durango (or whatever the code name is now)? Likely coming in 2013, with more news a few weeks ahead of the E3 video game conference in June in Los Angeles.

So what can be reasonably expected from Sony on Wednesday?

A historical perspective is worth a moment of reflection. When Sony launched the PS2 console, announcing it was wild success as it helped doom the Sega Dreamcast console by whetting consumer appetite for a new console. It also helped thwart the eventual launches of the Nintendo GameCube and Microsoft original Xbox launch. Keep in mind that while the PS2 life-to-date sales are north of 150MM units, while the Xbox and GameCube both finished south of 25MM units each. Clear win, well played, Sony.

This approach was simple: Sony wanted to “wow” consumers and capture their imaginations about how much fun a game console could be, with potential for other connected entertainment and communications. Who could forget the partnerships announced with Real Networks for streaming media and AOL for early “social” communications?

Even though the PS2 was too early on non-gaming entertainment, it was a wildly successful console cycle for Sony.

Step forward to the PS3 era – tied for second with the Microsoft Xbox 360 at roughly 75MM or so units each, and the original Wii at near 100MM units. Big, big win for Nintendo, and good progress for Microsoft cycle over cycle. And, Sony crept forward on connected entertainment via a console despite numerous re-starts of the PlayStation Network and an embarrassing data loss issue.

Step again — this time to Wednesday and the anticipated PS4 news. So what would be reasonable expectations? Again – the art of the long view is appreciated. Sony strategically will want to control as many media cycles as it can not only Wednesday into next Thursday, but also around E3 in June and again in September at the Tokyo Game Show in Tokyo, Japan. This means that Sony won’t reveal all — and shouldn’t, either. Wednesday should be all about “wow” factor.

So what can Sony “wow” consumers with? My perspective is that Sony will want to “wow” while being aware of key tenets from both Nintendo and Microsoft. Nintendo has a new console, fun controller, and a likely strong software lineup for holiday 2013. Microsoft? The Redmond folks will continue to do what they know works best—take a differentiator and talk about it, repeatedly. In this case, the Xbox Durango will likely lead with its differentiators – Kinect and voice commands. So how does Sony differentiate with “wow”?

Strictly in my opinion, I think the technology argument (PS4 tech specs vs. other consoles) is out, so it will come down to a) unique content, b) the integration of Gaikai, c) free-to-play gaming, and d) an improved PS4 controller.

I think the non-gaming content services today are largely commodities – every console has a partnership with Netflix, Hulu, etc. In my opinion, Sony has missed a window of opportunity with the recent DHD launch of Sony’s own Skyfall movie by not offering it to Sony PS3 owners first, but some special one-off flavor of a movie/TV service could likely come next week, too, or before the eventual console launch. For more on Skyfall, see the DWR piece posted earlier in February. Link is here.

I think it’s reasonable for Sony to confirm the PS4 name, or break convention to try to appeal to a broader, non-gaming audience. The PS4 news is also an opportunity to either cast-off or welcome back the PS Vita to the mix, by showing interoperability between the PS4 and the Vita. Wild card? Sony announces a PlayStation phone, too. A phone would potentially be a great step in the direction of Sony having multiple screens to control content around the home or mobile for consumers, a key theme highlighted in our recent TV Manifesto piece.

Is a phone coming on Wednesday? Unlikely, but Sony is in a challenging place right now having lost the battle for TV sales to its two biggest Korean challengers, Samsung and LG. The phone would provide a link between devices, and a step in the right direction for Sony fighting to regain its former position atop the market share charts.

Oh — and the number one media-driven question about Wednesday? “How much will the PS4 cost?” Don’t hold your breath — too soon, too soon. Wow first, details second. Capture the consumer imagination first and, the open wallet will follow.

If you would like to follow-up with any questions or discuss further topics covered in this piece, please reach out to DWR at sales@digitalworldresearch.com.

(Missives from the Digital Front is a series of opinions and thoughts, sometimes with a bit of snark, and don’t  typically qualify as a research post. Consider this a blog courtesy of P.J. McNealy.)

Recently, there have been a ton of rumors (#MostWrong) about your upcoming new video game console, code named Durango (#Xbox720WasTakenAlready). Some say that the new console will require Kinect and voice control (#Differentiators), while others say the console is now coming in 2014 (#GoodNewsForNintendo), or that it will have a 500GB hard disk drive (#PlentyOfRoom #CloudToo).

But I want to be crystal clear here (#ReadMyLips): I want to know about the optical drive rumors (#WillHaveOne). I suspect there is some trickery afoot (#MarketingTactic) to make people (#Noobs) think that there is a Blu-Ray drive (#HellNo #AlreadyHaveOneInMyPS3) coming in the Durango (#IsItNowKryptos). I think everyone is wrong. I think Microsoft already has a secret weapon in house: HD-DVD drives!

“Why not?” I ask. They can hold quite a bit, you’ll have a big HDD in the box already, plus you have this Cloud thing (#InTheSky) already. Just build two versions of Durango: one with an HD-DVD drive already built in (#90PercentOfBuilds) and one without an HD-DVD drive (#10PercentOfBuilds). And then, the coup de grace? Make the HD-DVD drive optional for all those owners who actually bought an HD-DVD drive for the Xbox 360 (#DopesLineUpOnTheLeft).

I am one of those dopes (#DopeDopeDope). I bought an external HD-DVD drive (#BitterBeerFace), and some movies, including King Kong, which my family thoroughly enjoyed (#WatchedItExactlyOnce).  Despite Microsoft conceding the race to Blu-Ray (#CES2008) and Sony (#Winner), all is not lost. A Durango-with-an-external-HD-DVD-optional-model-at-launch would make households happy (#AtLeastOneHousehold).

I bought my HD-DVD drive back in 2007 (#ThanksToAFriendWhoSaidTo), but remain optimistic six years later (#ISmellRefund #NoLongerFriends). Now all I need to see is more rumors that will force me to find the power cord for the damn thing (#PowerOfOptimism #LifeIsGood).

Best regards (#GrudgeHeld),

P.J.

(Missives from the Digital Front is a series of opinions and thoughts, sometimes with a bit of snark, and don’t qualify as a research post. Consider this a blog courtesy of P.J. McNealy.)

With the purchase, the movie is available on TV, phone, tablet or laptop, which is a winning strategy we wrote about in CES 2013: The TV Manifesto earlier this week. By distributing the movie on multiple devices, MGM removes a layer of consumer friction. The early platform winners? Amazon, the Xbox 360, CinemaNow, iTunes, Vudu, Nintendo and Sony, all of whom have playback rights for the movie either through their own service or via an application such as Amazon Prime Video.

This movie release is early, too, ahead of the February 12 release date for the Blu-Ray and DVD discs. The DHD copy is $14.99, but the Blu-ray version is currently listed at $19.99 on Amazon.com. So by coming out with a lower price than the disc, and early access, the trade off is that MGM gets more “control” over the consumer, more data, a better link consumers and establishes a chance to establish a new consumer behavior and consumption pattern.

Who might be upset with this new window? For the Bond movies, MGM and Sony partnered with 20th Century Fox for home distribution. Neither Fox nor any of the major box office chains would likely be thrilled by digital distribution of a movie that is still in a few theaters, but the concern is likely marginal at this point.

One other note of interest—on the Fox digital page showing Skyfall (http://www.foxdigitalhd.com/skyfall/?utm_source=ESPN&utm_medium=banners&utm_campaign=Skyfall), there is a section about ‘Cloud Storage” which reads “With Skyfall in Digital HD and other movies you purchase are available online anytime, anywhere as they are safely stored in a digital cloud.” This line alone clearly shows the consumer that the concept of ownership means “in the clouds” and safely to the studios means consumers can’t easily “share” the content, or copy, or pirate. The movie asset has been “protected,” and likely allows the movie studios to sleep a little bit better at night.

Ed.note:  Edited; Sony is co-financing and Fox is handling home distribution, not vice-versa as earlier posted. 

Publication date: February 2013

Summary: Despite the rollout of new TV technologies, the battle for the consumer is largely over and, the war for the consumer is on, driven by a multi-screen approach.

The document looks at this transition, the technology, consumer behavior, and business model implications. Digital World Research (DWR) also creates a compelling filter for companies – driven by their presence in the home and/or mobile, as well as a limited to huge potential to dominate consumer screen time. Companies are slotted as being in the favorable “top right” quadrant, or those in the other three quadrants trying to figure out strategies to get there. Companies are also analyzed for their potential to expand, either through build-or-buy-or-partner approaches.

DWR has over 15 years of experience in the consumer electronics and digital media space, with both financial and current consumer perspectives. This unique skill set, combined with ongoing discussions with a variety of industry leaders and consumer consumption behavior research, has all contributed to this think piece and framework for where industries are heading.

Companies Included In the Report: Aereo, Amazon, Apple, DISH, DirecTV, Facebook, Google, LG, Microsoft, Netflix, Nintendo, Panasonic, Rovi, Samsung, Sharp, Sony, Twitter, Zeebox

Price: $99

Format: PDF

LAST SUNDAY–BOSTON SUBURBIA–SOMEWHERE DURING THE SECOND QUARTER of the Patriots–Texans game, with 12 or so friends and family gathered around the TV, the house phone rang.

Private caller.

Who is calling during the game???? Clearly, someone I didn’t want to talk to, only I did.

It was the credit card early warning/fraud department calling to ask if I was on iTunes and charging things. Clearly, I was not, but somewhere in the midst of the first quarter, my nine-year old asked if he could use Mom’s iPad and was given the green light.

The credit card people said there were rapid charges for an app, a game, called DragonVale. Locating my son and my wife confirmed this, so I confirmed the charges were legitimate, and well, in fact, ours.

The bill? $106.24.

My son was genuinely surprised, and I consider him pretty tech savvy. “I used coins and gems, Dad, really!” he repeated nearly 10 times, and said he didn’t think he was using real money.

Owch. Either there has to be better parental control over iPad usage in our household, or DragonVale has some less-than-clear in-app purchasing. This will be investigated further.

The next morning, I sat down with my son and the dialog went something like this:

“What did you buy?”

“A dragon.”

“And what else?”

“Well, he needed an island. And a castle. And a…” the list continued.

From a professional standpoint, I’m a big fan of free-to-play games, and I think it’s great for the video gaming industry in general. And now I’ve come to understand something else: my son is a whale for DragonVale.

Monday night? DragonVale was deleted from the iPad…lesson learned.

(Missives from the Digital Front is a series of opinions and thoughts, sometimes with a bit of snark, and don’t qualify as a research post. Consider this a blog courtesy of P.J. McNealy.)

DECEMBER 22, 2012

Dear #XboxLive:

Today, y’er #KillingMe with your #XboxLive Service. I went to watch #ESPN3 on #XboxLive, but had to perform #28Steps or so first to #GetItToWork before I got #FAIL!

#NumberOfClicks

1. Go to #XboxLive Home Screen

2. Pick #MyPins

3. Pick #ESPN3

4. #UpdateNeeded. #REALLY? #AGAIN? Pick update and store to hard drive

5. Wait for download. #ReallyAnnoyed. Installed. Pick #Live Events.

6. Pick category. #Basketball.

7. Pick category. #NCAABasketball

8. Pick category. #Mens

9. Pick category. #ACC

10. Pick game. #BCvsPC

Enjoy game? #FAIL. #TechnicalDifficulties. #SCREAMatTV

Open request. If #Microsoft wants to offer another TV service beyond what they have offered historically (#WebTV) (#Owch) and improve on #XboxLive (#PainfulToday) and get consumers to shut off their satellite or cable TV box in the future for a Microsoft-branded product/service, work has to be done. #SOON

If a new service is #2013Guess?, then the #ClockIsTicking. Plus, #AppleTVisComing.

BTW, since I started typing this, the #BCvsPC feed? #Frozen. #IsTheGameOver??

If so, #IMissedIt

Best regards-

P.J. (@pjmcnealy or @DigitalWorldRes)

(Missives from the Digital Front is a series of opinions and thoughts, sometimes with a bit of snark, and don’t qualify as a research post. Consider this a blog courtesy of P.J. McNealy.)

This CES preview is provided free of charge to DWR supporters and followers. The PDF version is attached. Feedback in the comments section is welcome, and enjoy!! Click on the link below:

DWR CES 2013 Predictions