Evolution of the Set-Top Box
Wildly popular massive multi-player online gaming has driven a hunger for bandwidth and interactivity that has produced some interesting offspring. To support online multi-player gaming, video game consoles have been sporting internet connectivity since it was originally delivered over a phone line (Sega Dreamcast). Flash forward, and the blazing hardware and high-speed wired and wireless connectivity in today's video game consoles make them the perfect home media gateway. And they're cool. A Sony Playstation 3 was designed with sleek in mind. The same cannot be said for my Motorola set-top box.
Agile OTT video providers like Netflix were quick to jump on the market opportunity, and quickly rolled out apps for video game consoles. The plan worked. Soon, more people were watching IP-video through video game consoles than any other device; and the trend has continued. New research from Leichtman Research Group, Inc. indicates that “Video game systems are the key connected devices, as 28 percent of all households have a video game system connected to the internet.”
What's more, Netflix subscribers who use the XBOX 360 as their gateway watch more video. According to Sandvine, “On average, a Netflix subscriber using an XBOX 360 has about twice the daily consumption as an average Netflix subscriber (suggesting 80 GB per month).”
One Box to Rule them All: The Rise of the XBOX
If there's one video game console positioned to replace the set-top box and become the multi-service media gateway of the future, its the Microsoft XBOX 360. What's interesting, though, is that its not so much the device as it is the massive content ecosystem Microsoft has cultivated with XBOX Live. This aggregation of video content from numerous top service providers is unmatched. As you can see in Fig. 1, the XBOX Live gateway provides access to more than 50 leading entertainment partners. This includes standard OTT players like Netflix and Hulu Plus, but also telco TV from Verizon (FiOS) and AT&T (U-Verse), individual networks like ESPN and Bravo, and cable offerings from Comcast (Xfinity) and others.
