Game On: Consoles Are Changing How We Think About Entertainment (From the Magazine)

The E3 Conference

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Weeks before the launches of Sony’s PlayStation 4 and Microsoft’s Xbox One, the gaming-console industry stands at a curious crossroads: Its platforms have served up just as much, if not more, traditional entertainment like movies, TV shows and music than they have games.

 

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“For the first time in a new cycle of consoles, the primary discussion isn’t around game graphics. [It’s] around entertainment,” M2Research chief executive Wanda Meloni says. “Sony and Microsoft are focused on building audiences, and a broad offering of content, especially music and video, is critical to that.”

Through the years, Microsoft and Sony have amassed millions of users on their networks. Microsoft’s Xbox Live has more than 48 million people who actively use the service each month. Sony has more than 150 million registered users on its PlayStation Network, though it isn’t saying how many of those remain active.

In the realm of connected media devices attached to the largest screen in the house, Sony, Microsoft and Nintendo were among the dominant contenders of the past decade outside of cable and satellite set-top boxes. One in two U.S. households owns an average of two consoles, according to the Entertainment Software Assn. While gamers don’t have to connect their consoles to the Internet, about 76% of Xbox 360 owners and 82% of PlayStation 3 owners do, IDC analyst Lewis Ward says.

Last year, the field appeared to clear when Nintendo, whose Wii U console launch proved lackluster, essentially dropped out of the entertainment portal race to focus solely on games, leaving Sony and Microsoft.

But a funny thing happened during the last few years -- competition for the living room intensified. Connected media devices proliferated, from connected TVs and Apple TVs to Rokus and Google Chromecasts. And more are on the way. Intel announced a media device, OnCue, for 2014, and Amazon is said to be working on its own living room device. In addition, “micro-consoles” like the Ouya, Unu and Gamestick have cropped up, focused on streaming games and other content.

This matters to the music industry for three reasons, and all of them are good. The first is that these new devices represent absolute growth in the number of paths for digital music services to enter the living room.

“For content owners, this can be an opportunity,” Robert W. Baird & Co. analyst Colin Sebastian says. “These are exciting new platforms for music and other digitally delivered content.”

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