Is the Xbox the new home theater appliance? The country's second-most-popular gaming console, behind Sony's (NYSE:SNE) PlayStation 2, is giving its broadband Xbox Live service a theatrical spin by selling video downloads.
Come Nov. 22, Xbox Live subscribers will be able to stream shows and high-definition flicks from major studios like CBS (NYSE:CBS), Viacom (NYSE:VIA), and Time Warner (NYSE:TWX).
It's a brilliant plan on paper. Young, mostly male gaming audiences and episodes of SouthPark and Star Trek? Perfect. Then again, that same demographic group may pose some problems.
For starters, let's look at the method behind the madness of the four million current Xbox Live subscribers. Some are on the "silver" membership plan; it offers limited functionality, but it's absolutely free. They're unlikely to make for much of an audience, because the kind of gamer that isn't up to paying $7.99 a month -- or $49.99 a year -- for the more popular "gold" membership plan likely won't be paying up for bandwidth-hogging downloads, either.
The "gold" community would be a much more receptive audience -- they're already paying for online multiplayer capability, and opening that billfold wider still to snap up additional virtual items and games. But will they be interested in catching CSI, instead of playing Call of Duty 2 on Xbox Live?
Renting out high-def movies that take hours to download, and can only be viewed for a few days before they virtually disintegrate, isn't all that appealing, either. TV shows that gamers will be able to keep, at price points that are competitive with Apple's (NASDAQ:AAPL) iTunes store, are a sweeter deal -- but how long will it take before we hit the limitations of those 20-gig hard drives?
I can't blame Xbox for giving it a shot. If Apple and Amazon.com (NASDAQ:AMZN) are throwing their hats into the ring, why not Microsoft (NASDAQ:MSFT)? The content selection is also pure genius. Aqua Teen Hunger Force? Ultimate Fighting Championship? Perfect aim. The timing is also flawless, aiming to steal some of the thunder of the PS3 and Wii rollouts just days earlier.
I just hope that Microsoft isn't overestimating the appetite for readily available content from an audience that prefers to roll its own. Unless Microsoft intends to package minigames or Xbox-specific interactive features into the offerings, this may be a more difficult digital path to cross than it thinks.
Amazon.com and Time Warner have been recommended to Motley Fool Stock Advisor newsletter subscribers. Microsoft has been singled out as an Inside Value pick.
Longtime Fool contributor Rick Munarriz does own a 360, but that doesn't mean that he won't be in the market to square away a PS3 or a Wii this month. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
