• by Steve Smith , Staff Writer @popeyesm, February 27, 2007

While analysts fuss over DVRs, the shift to broadband, and other symptoms of fragmentation, the real challenge to TV hegemony was under many Christmas trees. For when the Xbox 360, Nintendo Wii, or Sony PS3 are on, TV programming is off.

But the true intentions of these pricey, next-generation game consoles finally became clear this winter. They are, in essence, media vending machines, ka-chinging on demand and broadband content directly into living rooms.

Microsoft's Xbox 360 Video Marketplace has been selling hundreds of TV episodes and renting scores of feature-length films directly onto the TV via the game console - in hi-def! Microsoft claims over half of the six million 360s in U.S. homes are connected to its online service, which gives them a marketing reach as large as many cable networks. And with little fanfare last year, the Xbox Live Marketplace was already leveraging this off-cable TV channel with monthly musical artist spotlights and free downloads, movie trailers promoting next weekend's releases and even banner ads for games and other media. When Video Marketplace opened last November, mighty Microsoft's own servers creaked beneath what Xbox Live director of programming Larry Hryb described as "the extremely high number of downloads" in the first 24 hours. We've been loving our HD film rentals and peerlessly sharp "CSI" episodes, which are iTunes-easy to buy.

While Wii and 3 Get Warmed Up

Both Sony and Nintendo added their own broadband channels with their PS3 and Wii consoles. Even early on, Sony's network had downloadable promotional trailers from the media company's films, as well as games to buy and transfer to the Playstation Portable handheld. Rumor has it that the PS3 will go head to head with the 360 in the digital media download business in 2007. Now if the company can just get some games into the over-powered hardware's under-powered library.

But it was the Wii that took everyone by surprise. The truly revolutionary motion-sensitive controller translates hand movements into game play and helped sell 600,000 units in a matter of days. Wii is also broadband-enabled, but for now Nintendo is being the most conservative about suggesting third-party marketing opportunities. Users can buy classic games and add-ons using the Wii Points credit system, perhaps opening the door for sponsored game enhancements. And this may be the real high scoring play for marketers, an ecosystem where brands underwrite the add-ins, extra levels, new characters, and media assets that drive the gamer experience. The mantra of games marketing is don't interrupt - enable. With the 360, Wii, and PS3 now in the game, the living room has a media feed that is interactive and on-demand. Let the media time-share wars begin.