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Gaming Consoles a Goldmine for More Than Just Games

Think gaming consoles are mere toys? Online content and services tied to Microsoft’s Xbox, Sony’s PlayStation, and Nintendo’s Wii will generate more than $8 billion in revenue for those companies by 2013, according to a projection by industry analyst Michael Cai of Parks Associates.

“Downloadable games and video are the most important revenue streams, now and in the future,” said Cai. “Downloadable Hollywood movies and TV shows are already generating $250 million in annual revenue for Microsoft, even though the service is available in only a few markets. The revenue potential for that business model is significant. Other business models, including in-gaming advertising and micro transactions are also becoming increasingly important.”

Cai maintains that Microsoft has the clear lead in this space, thanks to its Xbox Live service, but that Sony and Nintendo are working hard to catch up. Nintendo, for instance, announced a pay-and-play initiative for the Wii at the Game Developers Conference in February, and Sony’s PlayStation Network boasts nearly 10 million registered accounts.

Having three mainstream gaming consoles offering downloadable movies and TV shows could reduce video-only hardware platforms such as Roku’s Netflix Player and the Vudu Box to niche-player status, according to Cai. “Those guys can’t compete against Microsoft and Sony,” he said. “But I think Roku has a better opportunity than Vudu because it’s relatively inexpensive and it’s tied to Netflix. You can download Netflix movies to an Xbox 360, too, but the Xbox is a more expensive solution if you’re buying one just for downloading movies.”

Will ISP download caps, such as the one that Comast recently announced, put a damper on things? Cai doesn’t think so. “Comcast established a 250GB per month cap,” he said. “This will cut back on peer-to-peer activity, but I don’t think it will impact these legitimate services. I’m actually a little relieved; I thought they’d put the cap at 10- or 50GB per month—that would have an impact.”

  • Pei-chen
    So these online streaming HD contents won't have the bitrates/quality of blu-ray disc? If they are the same quality, 250GB means 5~10 movies a month with extra contents.
    Reply
  • Yeah, ISP caps are definately going to hurt this in some areas. My ISP is capped at 20GB per month for their "premium" service and only 10GB for their basic service. With a lack of ISP choice I'm not even going to be able to think about using any forum of mass digitial distribution for a long time to come.
    Reply
  • scurvywombat
    Well, the more these services are available it will increase the demand for higher bandwidth caps, and ISPs will offer more "premium services" to meet that demand... but that might take a while. At least Comcast capped mine at only 250.
    Reply
  • blackened144
    Ive been downloading 300+gb/mo for the last year or so, and Ive never run into a problem with Comcast. Hell, I downloaded almost 400gb just last week alone.
    Reply
  • gm0n3y
    scurvywombatWell, the more these services are available it will increase the demand for higher bandwidth caps, and ISPs will offer more "premium services" to meet that demand... but that might take a while. At least Comcast capped mine at only 250.
    That's a little naive. The whole idea that the "free market" will provide customers what they want goes completely out the window when there is inadequate competition.

    Also, the article states "This will cut back on peer-to-peer activity, but I don’t think it will impact these legitimate services." So peer to peer activity is not a legitimate use of bandwidth?
    Reply
  • kittle
    Pei-chenSo these online streaming HD contents won't have the bitrates/quality of blu-ray disc? If they are the same quality, 250GB means 5~10 movies a month with extra contents.Can you really SEE the difference in quality between a blue-ray disc in your player and streaming content on your PC monitor?

    Given a 40"+ HD panel im sure you could... but not everyone has their PC connected to such things.
    Reply
  • Pei-chen
    kittleCan you really SEE the difference in quality between a blue-ray disc in your player and streaming content on your PC monitor?Given a 40"+ HD panel im sure you could... but not everyone has their PC connected to such things.The problem is paying the same for less; no physical disc, lesser quality and you might incite the wrath of you ISP.
    Reply
  • invlem
    I wish I had a 250gb cap, Rogers in Canada puts the cap at 60GB for the mainstream service, and 95GB for their ultimate service
    Reply
  • gm0n3y
    invlemI wish I had a 250gb cap, Rogers in Canada puts the cap at 60GB for the mainstream service, and 95GB for their ultimate service
    I'm with Shaw (which is pretty much the same as Rogers and has a 60GB cap) and I have used probably 500+ GB in a month before and they've never said anything to me.
    Reply