Yup, the next Xbox might not be for you. The rumours of an "always on" internet connected next-generation Xbox aren't particularly new, though recent leaks and the distinct lack of any outright denial seem to further confirm these earlier rumours. Many gamers of course think back to the Great PSN outage of 2011, where the PSN online gaming system went down for 24 days and Playstation console owners were only able to play offline, single player games, and couldn't get their CoD fix. The fact is that no online service can guarantee connectivity in the face of determined hackers or even world events or natural disasters that can impact on connectivity. The other fact is that there are still areas of various Countries that simply don't have reliable Internet and even those with good Internet access often have bandwidth caps and throttling issues to deal with.
Still, that being said.. the question is "why?". Why would an always-on, Internet connected next generation Xbox make sense? It makes sense if it's not merely a gaming device, but instead offers additional services. The gossip is that the next Xbox isn't for gamers, it's a set top box
, entertainment center for everyone... that might play games. So what will this super duper, set top box, entertainment cornucopia of online goodness get us?
VOIP phone services are gaining ground. Microsoft bought Skype for 8.5 billion bucks so it's a good bet that while you'll still be able to group up with other Xbox owners for a party chat, you'll also be able call your kid on his cell phone via your Xbox, or even call granny on her landline. Skype is also a messaging system, so you'll be able to nag your husband to pick up milk on his way home from work, without ever putting down your controller. You'll even be able to take a skype call in the middle of gaming without stopping the game (how convenient! NOT.) There are even Skype phones, and it's entirely possible for people to use Skype and to get rid of a landline based phone system and use VOIP instead. My own cable company has done this and my own home phone system is in fact VOIP... and there really isn't much difference from a landline in terms of quality. This unfortunately means having an "always on" Internet connection though (and no emergency 911 dialing) but for those that have already given up a land line and only use a cell phone (an increasing number of the population), this is a viable secondary option.
It's been known for some time that Microsoft wants a piece of the IPTV action. More and more people are cutting the lines to their cable companies provision of Game of Thrones, and turning to Internet Protocol TV solutions. Netflix is approaching 30 million customers. Microsoft wants those customers. They've claimed that they want TV to be an interactive experience. When viewers see a news story, they'll be able to do an instant poll - like what Xbox owners experienced during the Presidential debates
last year. There are a increasing number of TV based apps becoming available and additionally, and more importantly, the current Xbox is already distributed as a secondary set-top converter box for some Internet-protocol based TV providers such as Canada's Telus (a phone company that uses internet to provide integrated phone/TV/Internet services) and trial runs have been done with Comcast and Verizon in the U.S. The current gen Xbox was designed as a gaming console, but the fact is that it is already being used as a set top digital conversion box for TV services and this business is booming. With new technologies like Microsoft's "illumiRoom" where the TV screen can be projected around the room, or the "smartglass" technology that can allow for interactive TV polls and other forms of social interaction while watching TV... Microsoft is well poised to bring new experiences to TV and movies.
Yup...note that subscription to Gold in the fine print?
DVR and Interactive Program Guides:
At work and forgot to set the hockey game to record? Do it on your smart phone and your TV show will record at home. Want to know what movies are playing on the 200 channels you get? Say "Xbox show movies" and your on screen TV guide changes to filter only movies. See an advertisement for a new show? Tell Xbox to find it and record it. No manual searching and inputting letters... just talk to your Xbox (and hope it understands you!) The reality is that the verbal Kinect input has better options as a user-interface than as a gaming input. Currently the actual recording is usually done on a separate central unit provided by the TV service, but there's no reason that the next Xbox can't actually BE this central set top unit instead of a secondary unit... and there is a strong likelihood that the next gen Xbox will be a DVR both for TV shows, and also for the ass-kicking you took in that last game of Battlefield. In the end, you won't be streaming media from your PC to your Xbox... you'll be streaming from your Xbox to your tablet or smart phone, or even your PC. Unfortunately, all of this wonderfully convenient tech has a price, and the price is that an Internet connection is required for most of this to work.
One of the wonderful advantages of being a PS+ user is that my PS3 updates in the middle of the night. I turn it on to see that there has been a system update, or various game patches, or just cloud storage of my game saves. I have no doubt that Microsoft will also introduce this convenience... but the catch of course is that your system must always be connected to the Internet. In addition to updates and gamesave storage, cloud services are gaining popularity as repositories for our music, video, photo and data collections. With Internet connectivity, we can access our personal data from anywhere, on most any Internet device. With Microsoft's Skydrive cloud storage it's not at all unlikely that while playing the next Elder Scrolls game that doesn't require an Internet connection, we may well be listening to our personal music collection via Skydrive... which does need that streaming Internet connection (oh, and of course we'll be waiting on those Skype calls!). I don't doubt that at some point we'll be able to record directly to the cloud and then stream our DVR recording to our Xbox, to our Surface Tablet or to our Windows 8 phone.... all of which of course requires that ubiquitous Internet connection.
Apps and more Apps:
With the creation of the Windows 8 app store, Microsoft needs more customers! As with most App stores, it's likely that Microsoft gets a percentage based cut of sales and in-app purchases (Apple takes 30%!). The ability to buy Fruit Ninja on your Windows 8 phone, and then download it and play it with Kinect on your home Xbox, while letting your kid play a different copy on your Surface tablet... Microsoft is happy. Soon you'll also be buying your music and movies (and maybe even some games!) though Microsoft store fronts... and faster than you can blink, Microsoft might actually be the next Apple (in their dreams anyway).
The pricing on the unit will likely be CHEAP! It's not unlikely that the basic unit will continue to be free if you sign up with certain TV providers, and Xbox and these providers will essentially form a symbiotic relationship. Get a free Xbox for games if you sign up with Telus Optik TV... or if you already have an Xbox, signing up for Telus Optik gets you an extra digital converter for a TV in your home... with Kinect voice commands to change channels, volume, read out your Skype messages, or tell you that you look pretty today.
As a retail unit, there is also likely to be a cheap $99.00 or less version that essentially competes with Roku or other current IPTV solutions, but it will also play app based game and possibly blu-ray movies. Of course, in addition to the low, low price you'll also have to pay a monthly gold membership fee in order to access the content - and frankly this is where the money earning power is for Microsoft.
For a slightly higher price, you'll even be able to play full retail games and watch blu-ray movies on your Xbox! Wow... what a novel concept... playing games on your digital tuner/IPTV/Skype/Skydrive/Kinect/blu-ray wonder box! When you subscribe to a TV service you'll likely be able to upgrade to this unit for a few dollars more or be able to buy it at your local retail store as a different SKU/model. If you want to commit to a gold subscription from the birth through the terrible two's of your next child, you'll even get a pretty good deal on the price. In fact, buying the next Xbox without committing to a monthly subscription may not even be an option.
TL:DR messy Conclusion:
This entire blog is pure speculation, but I think that the next generation Xbox may not be a gaming console at all. It may well be a set top, digital conversion box offering Skype, IPTV, app-based games and cloud based storage for photos, music and data. Rumours are that if you want to play retail games on the next generation Xbox, you'll have to actually upgrade to a higher SKU that allows for retail games to be played. Gaming is likely going to be an "extra" on the next Xbox. As an investor, I like this. Microsoft never has to produce one single game to actually make a massive profit. They can make money on subscription services, the app store, Skype or Skydrive add-on services, and licensing arrangements with TV service providers as a set top box. The money I have invested with Microsoft though my retirement savings will be well rewarded!
As a gamer - this frightens me. It's not the "always on" Internet connection that frightens me. Anyone who currently has an IPTV based provider like Telus is already reliant on an always-on Internet connection. Bandwidth caps already don't apply to TV services and likely won't apply to many of the other cloud based services they choose to offer as a provider. No, it's all the "junk". I don't want Skype calls interrupting my gaming, I don't want two TV shows recording in the background or to have to turn on my Xbox to see what's on TV (though of course, turning "on" the Xbox will be a thing of the past because it will be always on, and always connected to the internet... like most set-top boxes are). I don't want my music collection on Skydrive, or to play Angry Birds on my TV using Kinect. Mostly I don't want yet another monthly bill I have to pay and I just want to play my games.
Which is why I'll likely get a PS4... unless I eventually switch my TV provider to Telus and then.. yeah, dammit, I'm not gonna turn down that free Xbox - even if it's always on and always needs to be connected to the Internet to work, and needs a monthly fee like my hydro or TV or telephone or cell phone or crap! Reality is that much of our life is already reliant on an Internet connection, and monthly payments, whether we realize this or not.
Whether I buy a next gen Xbox for gaming or not... I'll be keeping an eye on my stocks as Microsoft possibly expands the Xbox into something everyone may want... even a gamer.