- The Washington Times - Wednesday, November 8, 2006

SAN FRANCISCO

Technology titans Microsoft, Apple and Google are among those scrambling to feed people’s ravenous desire to download films and videos from the Internet and watch them wherever they like.

Microsoft scored an industry first this week with the announcement that Xbox 360 video-game owners would be able to download films and television shows to consoles for viewing in high-definition format.

The much-anticipated Sony PlayStation 3 video-game console, due out in the United States Nov. 17, was built to connect with a Sony online entertainment content store via the Internet.

Apple Chief Executive Steve Jobs has promised a January unveiling of ITV devices that route pictures, films or video from computers to televisions in the home.

Apple’s ITunes store recently began selling digitized Disney movies online for viewing on IPods, and Microsoft is scheduled to arrive on the market Wednesday with a rival Zune MP3 player clearly crafted with video playing in mind.

Google reportedly has been exploring the potential for Verizon mobile telephone service customers to access the freshly acquired video-sharing Web site YouTube via hand-held devices.

Online retailer Amazon made deals with major studios to sell digitized films on the Internet.

“If you look at all these things together, the net result is you end up with a very different universe,” Jupiter Research analyst Michael Gartenberg says.

“We are going beyond the one-screen world. The people who control the content flow want to reach you whether it is Verizon to YouTube, IPod to ITunes, Xbox to Zune ….”

Mr. Gartenberg refers to the scenario as “a convergence play,” saying the strong trend is toward making devices work together in more integrated ways.

“The TV is a euphemism, for all intents and purposes, for the largest screen in the home used to passively view content.”

Online film offerings have left aspiring viewers with nettlesome limitations, analysts say. Apple has only been able to get films from Disney studios, and once downloaded, they can be viewed only on IPods.

Films downloaded to Xbox or PlayStation game systems can only be seen using those consoles. Microsoft puts expiration dates on downloaded films.

“There is a missing link that everybody wants: a device that enables [users] to get films, shows, pictures and digital music from a computer to a TV and also to transport them everywhere,” says analyst Phil Leigh of Inside Digital Media.

“Apple can take the advantage with its ITV.”

The Xbox and Zune announcements signaled a profound shift in Microsoft strategy, according to lead analyst Matt Rosoff of Directions on Microsoft.

For years, Microsoft pushed the concept that the personal computer would evolve into the hub for home entertainment, Mr. Rosoff says.

Also, Mr. Rosoff notes, video-game consoles are plugged into televisions by design, while computers tend to be relegated to desks.

A drawback with using an Xbox as a film repository is that its hard drive has just 20 gigabytes of memory capacity and high-definition video data takes up tremendous space, according to Mr. Rosoff.

Analysts expect Microsoft to begin selling higher-capacity replacement hard drives and Xbox consoles with lots more memory space.

“At the end of the day, these consoles are still going to be about games first and foremost,” Mr. Gartenberg says, “but as their capabilities grow over time, we will start seeing these secondary functions emerge.”

Microsoft and Sony were selling game consoles at losses and hoping to make their profits by selling online content, Mr. Rosoff says.

“Microsoft wants to offer a large entertainment experience, with content and enhance the value of the devices to gain another place in the living room,” says Jupiter Research analyst Joe Wilcox.

“The war for the living room stays open.”

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