• by Steve Smith , Staff Writer @popeyesm, December 16, 2010

Roku, Google TV, Apple TV and Boxee may be scrambling to capture the hearts of digital media fans and be the source of streaming media to the living room TV. But, truth be told, they are skirmishing over the margins. There are already scores of millions of boxes that have been sitting beneath the TV for a couple of years now, most of which are Web connected. And they are springing to life. The latest metrics from Nielsen show that 20% of the time the Nintendo Wii is on, the users are streaming video (most likely Netflix) instead of playing games, which occupy 69% of Wii time. The share of video-on-demand time spent on Xbox (10%) and PS3 (9%) are smaller but still substantial when multiplied across their enormous installed base.

But more than time spent, a fair number of people are coming to see their game console as the multimedia entertainment hub Sony and Microsoft especially wanted them to see. In a survey of users, 26% of Xbox owners use their rig to stream video (which includes Netflix, ESPN and others) while 23% stream video on the PS3 and Wii. The users are also seeing these boxes as the downloadable media service Apple TV once dreamt of being, with 22% of Xbox owners watching downloaded TV show or moves and 21% of PS3 owners.

Both Sony and Microsoft have always seen their consoles as Trojan horses in the living room wars. By piggy-backing other capabilities on that core, irrepressibly appealing pursuit of gaming, both managed to slip technologies into that TV ecosystem they could later exploit. Sony seems to be realizing its master plan in putting Blu-ray players in all of its game units. That ploy helped eliminate the competitive format (anyone remember HD-DVD?) so that 72% of owners use the deck to watch DVD/BD movies, compared to 43% watching DVDs on the Xbox. For Microsoft's part, they got into downloadable content early, and they always saw this platform as an extension of their digital advertising online and on mobile. Your Xbox 360 dashboard is brought to you by a constant stream of sponsors now.

And while the game consoles do have an enormous installed base to leverage for streaming media, they don't have the variety and usability of the dedicated boxes for now. Netflix on Xbox always seemed beholden to the Xbox interface of fanning tiles, which is not as effective for film browsing as the walls of video boxes offered by Apple TV and Roku. Sony's Netflix interface has been upgraded recently, and almost all of these platforms would benefit from a more app-like approach that let the third party providers offer UIs that matched the medium and the use cases. And all of the game consoles really fall down in their integration of Web shows themselves.

While I have seen episodes of The Guild buried deeply on the Xbox, and Sony has its own reality show series running on the Playstation Network, the majors don't seem interested in pulling all too much from the web. Is that why the browsers on the PS3 and Wii seem almost deliberately sluggish and awkward, to discourage actual Web access? Microsoft was more up front about its reticence to let the real Web in. They just didn't include a browser on the Xbox.

The consoles are in a position to host very effectively the scads of online video programming that now trickle onto TV screens via PCs and the parade of new set top boxes. But why so reticent about appifying these experiences and letting the wider Web pour in? Control? Competing ad models from Web video hubs and branded entertainment? The fear of a fragmented game console of options that might start eroding their core gaming businesses? They want the game box to be an entertainment hub, but a well contained one.