The day before the doors to the E3 (Electronic Entertainment Expo) show floor open in Los Angeles, Monday, June 6, Microsoft will spend 90 minutes convincing folks at a press conference that Xbox is an entertainment console, rather than a game console. They've been singing this mantra for nearly 10 years, and I've been writing about this transformation for almost as many, most recently in April.
While I believe the initial push for the transformation from game to entertainment console centered on growing market share to more than gamers, now the focus spotlights the ability to seamlessly target ads across multiple Internet-connected devices. In fact, a Microsoft executive told me that in 2007 and I have not been able to let go of that thought since.
Think of the way Apple drove loyalty through interoperability from computer to music device and then mobile phone. Now Apple is trying to tie in the television. Microsoft's Xbox "entertainment experience" will become its answer to Apple TV and Google TV, complete with search engine and the ability to start watching a program or playing a game on one screen and seamlessly moving to another. Others have created that seamless movement, but Microsoft has the deep pockets to integrate and build out a network of digital display and search ads that works. What if marketers bought paid-search ads through adCenter to run on Bing or Yahoo engines and they also served up while someone surfed the Web through an Xbox console? And what if ad retargeting took place on a mobile device?
The voice-activated experience Kinect provides when hooked into the Xbox supports verbal commands while surfing through content on partner sites such as ESPN, Netflix and Hulu. What if searchers could search by voice on Bing? The technology, known as Natural User Interface, lets users talk and gesture through games and searches, making the entertainment experience fun and easy. In a blog post, Microsoft VP of Corporate Communications Frank Shaw writes: "The vision for Xbox is straightforward: All of the entertainment you want."
Unlike Shaw, I don't think it's difficult to recognize a transformation when the message comes through crystal clear. Microsoft sold more than 53 million Xbox 360 consoles. There are more than 30 million Xbox LIVE members, and consumers have bought more than 10 million Kinects. Microsoft's infrastructure needs developers to build out the network similar to the way Google continues to build out its Android developer network on mobile and Google TV.
Microsoft must integrate the Bing search engine into the Xbox. Consumers cannot have a full "entertainment experience" without it. Ben Schachter, analyst at Macquarie Securities, ties it together. Although he wrote and published the research note to look at what's driving the estimated 60% increase in Google's sales and marketing expenses in 2011, his insight brings confirmation on the need to connect the screens with support for search.
For Google, products such as Android drive "incremental searches and significant share gains (we estimate mobile search share at 97%)," Schachter writes. He also tells us there are 160 million active Chrome browser users. Android also supports Google TV apps.
As for Google TV, Schachter expects Google to follow the Android roadmap closely. "It's still early, and despite a very weak initial rollout, Google has an opportunity to drive more Internet usage and video to the TV screen," he writes. "As with Chrome OS, the long-term potential is interesting but it needs better execution and demand."