Consoles vying for center stage
If your home doesn't already have some sort of network of high-tech gadgets, there's a good chance it will in four years. At least that's the prediction of Parks Associates, a firm that studies the market of digital technology. A report last month from the analyst group pegged 2010 as the time when about 30 million homes in the United States will run connected entertainment networks.
The report comes at a time when Microsoft and Sony are hustling to cram more and more bells and whistles into their Xbox 360s and PlayStation 3s. Each console-maker's goal, of course, is to make its system the center of as many home-entertainment setups as possible. And the console-makers' audience is getting bigger every day. In 2010, according to US Census Bureau forecasts, there will be about 115 million households in the United States. If the estimate of 30 million proves true, more than a fourth of American homes will soon run some sort of networked entertainment center.
On the surface, the phrase "connected entertainment network" sounds plucked from a corporate-jargon handbook. A basic question must be asked: What is it? According to the firm, it's a home-network link between a PC and at least one other consumer-electronics device, such as a DVR networked with multiple TVs, or an iPod streaming music wirelessly to a PC or stereo.
One combination in the realm of gaming is an Xbox 360 and a media-center extender. Microsoft's console acts as a liaison, projecting a PC's music, photos, or video onto a television. The Xbox maker's E3-announced Live Anywhere campaign--which plans to synch 360s, PCs, and cell phones--is another.
"Consoles thrive on ease of use," Parks Associates analyst Michael Cai told GameSpot. "The popularity of console gaming partially comes from the fact that you don't need to reconfigure your console every time you play a different game."
The impact that game systems will make in the realm of connected entertainment is less certain, the analysts conceded. "It is a difficult question to answer," said Harry Wang, the Parks Associates analyst who penned the firm's report. Out of 4 million Xbox 360 consoles sold, he said Microsoft told him, about 100,000 customers are using the media-center feature--fewer than 3 percent.
"That's a tiny percentage of total Xbox consoles sold," Wang said. Yet he was optimistic. "Going forward, I think definitely the group will continue to grow, become larger, and will blend in to our forecast."
"Actually, we are tracking significantly higher usage than that number," a Microsoft representative pointed out.
"We all know that Xbox 360s have been supply-constrained until quite recently, and the first purchasers of the consoles are really the most avid gamers," the spokesperson said. "Now that there is more supply of Xbox 360 consoles ... we are going to start seeing even more people using the media-center extender functionality."
Widespread access to high-speed Internet in the US has introduced consumers to networking. As game consoles prosper thanks to their no-nonsense setup, Parks Associates said that companies must ensure their gadgets are easy to use with other devices--if they want people to use them.
BEYOND FUN?
Connected entertainment is different from the "digital home"--the ambitious notion that one day all of a household's electronic devices, from TVs, PCs, and game consoles to security locks and automatic window openers, will talk to one another.
"The digital-home concept has two parts," Wang said. "One is about entertainment; the other is about home management and home control. If we just talk about entertainment, that is the vision of the digital home."
Microsoft claims that its next-gen console has encouraged more people to scoop up high-definition TVs. "And it is reasonable to assume that the entertainment choices Xbox 360 offers are driving the adoption of connected entertainment as well," the company representative said. "Media-center PCs really only hit critical mass in the US this past summer," and the launch of Windows Vista, with its built-in media-center functionality, could encourage more to try connected entertainment, he said.
Likewise, "the home-control, home-automation stuff is moving slowly," Cai said. It is similar to how PC games and graphics cards, not business applications, encourage more powerful computer hardware. "Because all of the important players like Intel and Microsoft [and] Sony are pushing the digital-home concept so hard, it might happen quicker in the entertainment space," Cai said.
So long as it's easy to use, entertainment--including game consoles--could be the catalyst of greater connectivity throughout the entire home. There is, however, a vacuum in the market's space: No single company with a killer app or proven business model is leading the way. Connected entertainment may offer a new way for companies to cash in, but first they have to figure out how.
"It's all about users' demand for anywhere, anytime, and in a way they want. If you provide this opportunity ... the sales of those devices with networking support will also go up," Wang said. "That's a big incentive for [companies] to look at these numbers and examine what they can do to give consumers the experience that they want."
