Owners of Microsoft’s Xbox 360 game console will soon be able to watch science fiction epics as well as play them.
Microsoft said last night that it would offer movies and episodes of television shows for downloading through its Xbox Live online service in the United States, starting Nov. 22.
With the new offerings, Microsoft is joining cable giants and Internet start-ups on the long list of companies hoping to profit from video downloading. But Internet-based services have had trouble getting traction because it can be complex to send a downloaded film to a television screen and frustrating to watch it on the small screen of a computer. Owners of the Xbox have already connected it to a TV and, in most cases, the Internet.
“What makes this big is that there’s no PC in the middle,” said Rob Enderle, principal analyst at the Enderle Group.
Microsoft has negotiated the rights to rent or sell more than 1,000 hours of material from CBS, MTV Networks, Paramount, Warner Brothers and Turner Broadcasting, along with the martial arts show “Ultimate Fighting Championship.” Some programs will be available in high-definition video.
The video store will work much like that of Apple Computer, with some important differences. While users will be able to keep television shows, movies can be rented for only a limited period. The videos will not be playable on other devices and cannot be burned onto DVDs, but the online service will keep track of purchases so that users can log in to watch their videos on a friend’s Xbox.
Peter Moore, Microsoft’s corporate vice president for interactive entertainment, said that the price of standard-definition videos would be comparable to what competitors charged. Apple’s iTunes charges $1.99 for an episode of a television program.
High-definition content will cost more, Mr. Moore said, because of the costs involved in storing it and making it available for downloading. Purchases will be made with points that users can buy with a credit card or a gift certificate, or win in contests.
Mr. Moore said the service was partly intended to make the Xbox more versatile and therefore more attractive. “Direct revenue from this over the long term could be important,” Mr. Moore said. “But this is also another reason to buy an Xbox 360.”
New game consoles from Sony and Nintendo are due out this month, a year after the Xbox 360 went on sale, so extra features could help Microsoft keep up in the marketplace. Nintendo is concentrating on game play, but Sony says it also has other content in mind.
“We haven’t announced any content besides games,” said Dave Karraker, a spokesman for Sony Computer Entertainment America, “but all the executives have said that downloading other entertainment content is something the PlayStation 3 is capable of doing.”
Judging by the initial offerings, Xbox Live will be something of a cyberspace version of the Spike Channel, MTV Networks’ cable channel aimed at young men. It will sell episodes of “Star Trek,” remastered in high definition, as well as the “C.S.I.” shows, some music videos and cartoons from the Cartoon Network’s “Adult Swim.”
“The interesting thing is that we’re delivering the 18-to-34-year-olds who aren’t watching TV,” Mr. Moore said.
Microsoft has sold more than two million Xbox 360 consoles in the United States, according to the NPD Group, a market research firm. Most of those who buy the machines sign up for the Xbox Live service, which requires broadband Internet access and allows users to compete against each other.
Since the introduction of the Xbox 360 last year, the service has also sold simple video games and other material. This year, Microsoft started to hint at its ambitions for the Xbox Live service when it purchased a company that places advertising in video games and made an ad deal with Cadillac.
In the last few years, Microsoft has been pushing the idea of Media Center PCs, which are meant to sit in the living room and supply music and video to the stereo and the television set. But the concept has not caught on, in part because of the complexity of setting up and using these systems.
Mr. Enderle said that apart from simplicity, another feature that would set the XBox Live service apart is that it will be the first service to sell downloadable movies in high definition, at a resolution similar to or better than a DVD.
Until now, he said, most studios have been reluctant to allow cable channels to show movies in high definition for fear of piracy, but that would be less of a threat on XBox Live.
Early next year, Apple plans to introduce a product that, on a preliminary basis, it is calling iTV and that is intended to be a bridge between the computer and the television set.
But Microsoft will go into the video business with a different business model. Apple, most analysts maintain, does not make much money selling iTunes content, but makes up for that by selling more iPods, which are extremely profitable. Microsoft, which analysts say loses money on each Xbox 360 it sells, expects to make up for that by selling games — and now video.
“This is a razors-and-blades business,” Mr. Moore said. “I’ve taken the hit on the razor. And the ability of Microsoft to offer more blades gives consumers more choice and drives more revenue.”
The video downloads, especially those in high definition, will take up a lot of space. Microsoft says a one-hour television program in high definition will take up about 2 gigabytes of the console’s standard 20-gigabyte hard drive. Microsoft says the Xbox will play both movies and TV shows as they are being downloaded, although with larger files there will be a delay before playback starts, in contrast to the video-on-demand services offered by cable companies. High-definition movies will take an especially long while, depending on the speed of the Internet connection.
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