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“Some 54 per cent of consumers chose connected features,” said Gracyzk, by which he meant features that allowed the building of a feeling of community while watching TV.

Gracyzk stopped there, not wanting to give the game away to help other IPTV suppliers to build their roadmap, especially those that can’t afford to survey 7,000 consumers, and went on to show off the Xbox 360 used as a set top, boasting that integration between gaming and IPTV was a feature that cable TV and satellite TV just could not offer. He also said that operators would be selling Xboxes bundled into their IPTV services before this Christmas, but stopped short of saying who or where.

Well we’re not quite sure why cable and satellite can’t do the same. Either one of them can use an IP return path using an existing broadband line, and cable of course sells the dominant portion of these in the US.

So does that mean that if Comcast comes along and asks to sell the Xbox 360 to its customers and wants to build an IP integration path, that Microsoft would say no. “We could work with cable where it has upgraded to offering IP,” Gracyzk conceded.

He also said that the Xbox 360 could offer channel change in under half a second and that existing Xbox devices could download software to turn them into set tops, or operators could source new devices, and that this was a choice for the operators.

We remain cynical about any operator offering an Xbox as a set top. For a start which Instant Messaging service would people use on their TV set. The one provided by their IPTV operator, or the direct Xbox Live service? Xbox Live is a route to market for content such as games and films, and as such is a Trojan horse for an over the top video play. Microsoft admits that it has been described in this way, although says that the entire service would be under the control of the operator.

So does that mean the operator can disable the connection to Xbox Live on an Xbox sourced and subsidized by operator cash? Can it offer a preferential route for using IPTV IM?

When we spoke after to Mueller-Schubert he admitted that these kinds of details were in the hands of operators and had not all been worked out yet, and perhaps the IM services would be interoperable. But I’d be pretty upset as a customer that opted to get a new Xbox 360 cheap or free from my IPTV operator only to find I couldn’t order videos over the Xbox Live link. Equally I’d be pretty upset if I was a 15 year-old gamer and my IM strings were suddenly stored on the system my parents used.

It’s the same for VoIP over the IM link of Xbox 360. Wouldn’t this allow the Xbox service to undermine the fixed voice services that the IPTV operator wants to maintain? In the end the Xbox is a better purchase from the retail store where it can be used to undermine existing operators services as much as it likes without trying to wear two hats. And if operators are going to start using them for set tops, what’s to stop the far more powerful PlayStation 3 from have a set top client written for it, and being introduced in the same way. There are a lot more games, and better ones, available for that device.

Copyright © 2007, Faultline

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