Designed by James Sloss

Designed by James Sloss

There has been speculation since last year that Microsoft was going to make a serious move into the media streaming market when (or after) it's Next Xbox (720) is released. Microsoft announced last year that more then half have the time their customers spent using their Xbox 360's it was to access entertainment other than gaming. Over the years they have continued to add services and channels to the Xbox Live Gold member tier ($60/yr) to make the gaming device more functional and to attract other parts of the family that may not be gamers. The logical step would be to offer an affordable device that can be sold next to competitors like the Apple TV, Roku and Google TV for a comparable price. This would expand the reach of the Xbox brand to those that don't want or aren't willing to pay for the high-end computer graphics of the full console. You can currently buy an Xbox 360 for $199 and pay $60/yr for a Xbox Live Gold membership to access all of the media Microsoft provides. If you go into participating stores like Best Buy you can pick up an XBox 360 for $99 with a 2 year commitment to Xbox Live at $15/mo or $180/yr (ouch).

The rumors of Apple's plans for the living room with the Apple TV have been going on even longer. Apple is likely held up trying to secure content deals that Microsoft in some ways already have the jump on. (FIOS/AT&T cable deals). If you believe the rumors about the Next Xbox (720) then it appears Microsoft has already secured the deals needed to turn the Next Xbox into your next cable box. It's reported that Xbox's UI would live on top or possibly totally take over your cable service UI, giving Microsoft an enormous opportunity and a hell of an advantage over their competition. (Something I predicted Apple would do with the Apple TV) Having total reigns over how cable TV is displayed and presented combined with the Kinect, Xbox Live's community features and Xbox Live arcade for $99 would make for a very compelling device.

Related: The Fight For The Living Room: Microsoft vs Apple

READ: James Sloss take on Xbox Mini

There are two different ways Microsoft could bring a mainstream media streaming device to market. One focusing on the past and the other is betting on the future. Lets take a look at both hypothetical devices to get a better understanding of their strengths and weaknesses.

Xbox Mini

A smaller version of the already shrunken Xbox 360. Possibly disc-less to save on space, heat and cost. Making it a download/streaming box only for games and movies, etc.

Created by James Sloss

Created by James Sloss

Strengths

  • A $99 price point offers an affordable path more casual gamers and lower-income households to be exposed to the XBox brand
  • It would make for a great second device for the bedroom or a way for those that own lots of games on XBox Live Arcade to still have a way to play them. Most signs point to the Next Xbox (720) not being backwards compatible.

Weaknesses

  • Getting the aging chipset small enough to be a set-top box that doesn't require a huge power brick connected to it could be extremely challenging and require more effort than it's worth. 
  • Using the old chipset to run the old games, locks it to the past. The new entertainment/TV features coming to the newest Xbox probably wouldn't make it because of the different architecture of the machines. 

Xbox TV

This is the forward thinking media streamer that uses an ARM chipset that's fast, cheap and sips power. The Xbox TV would be a $99 set-top box based off of Windows 8 and run an OS kernal similar to Windows Surface RT. It would be disc-less and wouldn't play any legacy Xbox 360 games (unless developers ported Xbox Live Arcade games over). Xbox TV games could be compatible with Windows Surface RT/Metro games and vice-versa. It would have all of the media/entertainment features the Next XBox (720) would have including Kinect and a coax cable input for the rumored cable TV integration. 

Strengths

  • Using Arm chips would all the XBox TV to be cheap, quiet and small
  • It's an Xbox for people that really just want the entertainment features of the Xbox with a little gaming on the side
  • Making downloadable arcade games compatible on the Next Xbox, Xbox TV, and Windows RT/8 creates a large pool of potential customers for developers and greater integration for consumers. 
  • The Xbox TV would be Microsoft aping Apple and whatever they have planned with the Apple TV. Creating a set-top box with cable integrated into their UI with an app store and games (with a real controller) would deliver everything that people have been begging Apple to do for years.

Weaknesses

There aren't any...this is the set-top box Microsoft needs to build!

Conclusion

In all actuality Microsoft could release both of these devices, just at different times. The Xbox Mini could be released for the holidays or shortly after the Next Xbox (720) is released. This could calm some of the backlash they'll get for not offering a backwards compatibility solution. Then later in the spring or summer of 2014 the Xbox TV could be released. Of course this gives Apple almost a year to make their move with Apple TV, which could happen this fall or early 2014 as well. When in comes down to it, the Xbox 360 is already the most popular set-top box in the U.S. (40 Million Xbox LIVE subscribers). If they're able to get a $99 set-top box that transforms your typical cable experience into something more entertaining and useful then I think they'll have a hit on their hands. The biggest question mark is the mandatory XBox LIVE subscription. Can Microsoft offer enough to make it compelling for non-gamers to pay the yearly fee? Maybe a different price structure for the media devices altogether.