Xbox 360 evolves into an entertainment hub

When Microsoft debuted the Xbox in 2001, there wasn’t a lot of reason for the broader entertainment biz to take note. It was, after all, just another competitor in the videogame space threatening only Nintendo and Sony’s PlayStation unit.

Microsoft, though, had bigger ambitions. Nine years later, the Xbox 360 — the current-generation console — has entrenched itself in millions of living rooms. And while its chief focus remains games, the Xbox 360 also has evolved into a full-fledged entertainment hub whose appeal extends well beyond players.

New films can be downloaded and purchased. Catalog titles can be streamed. Customized music is at users’ fingertips. And, in some areas, it even streams live television. The result: For many, it’s become an indispensable entertainment system.

“There’s a huge opportunity there,” says David Hufford, senior director of Xbox product management. “What you can envision down the road is not only live television coming through Xbox 360, but where you could share it with your friends. … Now that we’ve brought all of the entertainment into the Xbox in ways that people understand, we can mix and mash up some of those forms of entertainment and try something new.”

Microsoft is hardly alone in its efforts to take over the living room. Sony’s PlayStation 3 also has a robust videostore with content from most major content providers. All three of the major consoles have struck deals with Netflix to allow customers of that service to instantly stream films to their TVs.

While Nintendo’s interests in the nongaming aspects of the Wii are minimal, Sony has remained competitive. Next month, it will launch a high definition digital video recorder for the PS3 in Japan. (At present, the company has not announced plans to release the device, called Torne, in North America, but an announcement could come at the Electronic Entertainment Expo in June.)

Sony also has started creating original programming, available exclusively to PS3 owners. The most ambitious project — an eight-episode reality show called “The Tester” — began Feb. 18 and was developed in conjunction with production house 51 Minds (“The Surreal Life,” “Rock of Love”).

Scott Steinberg, publisher of DigitalTrends.com, observes “It’s no secret the audience is fracturing and splintering into thousands of different directions. (Console makers) are attempting to position themselves for the next 10 years.”

It’s Xbox, though, that has been at the forefront of the mass-market entertainment push. It was the first game console to strike a Netflix deal (which, analysts say, drove 600,000-800,000 new subscribers to the service in the first year). The company also allows subscribers to access Last.fm through their consoles, giving them customizable music streams.

Last year, it struck a deal with Sky TV to deliver live programming to the U.K. and Ireland. And at the Consumer Electronics Show, the company announced that U.S. customers of AT&T’s U-Verse TV service will be able to use the console as a set-top box later this year.

Gamers have gotten older as the industry has matured. (The Entertainment Software Assn. says the average gamer is 35 years old.) The demographics have also gotten wider, with the number of women over 18 nearly doubling the game-playing population of boys under 17.

But the evolution of the consoles into entertainment systems hasn’t been as much about maturing with the audience as it has been an attempt for the hardware-makers to grab new market share. No matter how hard they try, Sony, Microsoft and even Nintendo realize that not everyone will enjoy vidgames. But if that same system can offer several other frequently used entertainment options, it could boost sales.

“I think, more than anything, what this has done is it has made the Xbox 360 accessible to everyone in the home,” Hufford says. “A husband may want to play a game and the wife may want to listen to Last.fm music. That’s one of our goals.”

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