Microsoft Toys With New Xbox-Only Entertainment Format

Microsoft (Nasdaq: MSFT) has teamed with Hollywood production company Safran to create original content available only to owners of its Xbox 360 gaming console, the two companies announced Monday.

Safran has helmed the production of several films, including "Scary Movie," and it has produced recent films such as "Meet the Spartans" and the upcoming "Chilled in Miami."

The "pioneering distribution deal," according to Microsoft, will see original shows distributed via Xbox Live on the game maker's Xbox 360 video game platform.

Digital Media Hub

Boasting a subscriber base of some 10 million Xbox 360 owners, Microsoft's six-year old Xbox Live portal began offering users the ability to download TV programs and movies back in 2006. The site currently offers content from more than 35 networks and film studios, including ABC, Comedy Central, Lionsgate, MGM, MTV, Nickelodeon and Warner Bros.

With this latest deal , the game maker continues on its quest to make the console the center of the user's digital entertainment system and move the device out of the basement or game room and into the family room and living room.

"Microsoft has been very successful with its movie downloads, TV shows, clips, etc. So this is the next step in an evolutionary process here. And the next step is to start getting into unique content," said Mike Goodman, a Yankee Group analyst.

"Microsoft views the 360 as essential to the digital living room and as part of that delivering a full experience to the consumer. They began with television shows then added movies on top of that, trailers, and now, with developing unique content for the 360 with this deal, they're fulfilling their aspiration of what the 360 will be," he continued.

If Microsoft really wants to create a viable ecosystem, it cannot be 100 percent dependent on the same content available to every other console. This will help Microsoft differentiate itself from the PlayStation 3, Goodmand told TechNewsWorld.

"Think of the Xbox 360 as the new on-demand television channel. Initially, a new cable channel airs older programming, and eventually as their audience grows they begin creating original content," he pointed out.

An Original Production

The original programming reportedly set for release sometime during the summer will initially include as many as six short-format -- think 10 minutes or less -- shows. In a nod to the console's predominantly male 18- to 34-year-old demographic, the shows will fall into the comedy, horror or sci-fi genres.

Greater details regarding the exact nature of the programming and release dates are still forthcoming, Microsoft said.

Although some users may have hoped for a more family-friendly variety, launching shows that appeal to its core demographic is the smart thing to do, said Michael Inouye, an analyst at InStat.

"Targeting the comedy and horror is a relatively safe entry into the marketplace. Comedy clips still comprise the majority of online video being consumed by viewers across the board and as a genre is probably the easiest to watch more than once, thusly increasing its resale value," he told TechNewsWorld.

"So Microsoft's play is fitting for the market in its current incarnation, and I would imagine over time you will see it becoming more mainstream if and when the Xbox 360 becomes the centerpiece to the digital entertainment center," Inouye continued.

With rumors making the rounds that other deals with content distributors such as Netflix (Nasdaq: NFLX) are in the works, the Xbox 360 users could soon have a much wider choice.

"This is part of Microsoft's continuing strategy to make the Xbox 360 a digital entertainment hub. These shows may not be enough to do it on their own, but if Microsoft continues to add first-party content and strikes more deals with big distributors -- there have been rumors of a tie-up with Netflix for movie rentals, for instance -- then it could succeed in broadening the console's audience and maintaining its relevance," Matt Rosoff, a Directions On Microsoft analyst, told TechNewsWorld