Screw Blu-Ray, We’ve Got Digitial

Since the last breath of HD-DVD rumors have been flying about Microsoft’s need (desire?) to get into the Blu-Ray hardware for their 360. The rumor was feasible because Microsoft already spent time working the HD-DVD angle for their “home entertainment” Xbox 360 console.

Although Microsoft’s Shane Kim told Forbe’s, “I can categorically say that we’re not working on a Blu-Ray player for Xbox 360,” there is further proof in Microsoft’s direction: Netflix. From a profit standpoint, Microsoft’s got more to work with in a downloadable digital format with Netflix than they do sending another specification off to manufacturing.

The effort that went into the HD-DVD addon was significant but with risk comes reward, but risk also comes with the chance of failure. Microsoft had to write it off as a failure, do they really need to go through it all again when digital downloads are the future of media? Probably not.

The Xbox 360 is going to be three years old this year, positioning another addon hardware storage player seems like the wrong idea for many reasons:

  • Spend your R&D efforts on the next-generation console, not more fluff addons to compete against Sony.
  • Blu-Ray for movies is still risky, considering the cost of movies in the market (and their slight increase when HD-DVD died).
  • Global adoption of Blu-Ray is still years off

Undoubtedly, Blu-Ray would be a great storage medium for their next-generation console because it could be established as the core storage platform for developers. If the intent is just to play Blu-Ray movies, you’re going to work hard, today, when adoption rates are so low.

Until you can use a Blu-Ray player for both games and movies, stick with digital downloads of movies and retail purchases for games. Maybe next-generation.

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Gamers around the world are going to feel the pain in the 2009 holiday season after the economy shakes apart many great development studios. Electronic Arts feels the pain of being a public company as their investors complain about lackluster revenue, THQ deals with closing studios to extend their runway and other firms will lose more headcount in the coming months.

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The financial market has played tricks on everyone in our global economy and companies across all industries are going to feel a bit of a tightening around the belt. Investors are shaken and doing their best to protect their investments and cutting loose those that aren’t projecting profits in the near future. Game studios are going to slow their financial burn rates, trim a bit of the fat and hunker down the long term. The end result, next years holiday season will have a few less games because those games are being dropped to the floor now.

Mid-sized studios within larger firms may find their projects canceled or put on hold and their employees re-structured or let go while big studios assess what projects will make the long haul. This is the ugly side of the business, having to make a decision on what games stay and what games go with the grief of having to tell some of your best talent “goodbye.”

The bad part of the industry is occurring today, with publishers posting mediocre profits and trying to convince their investors to be patient and trust they’ve got a firm hold on their destiny. The game industry is not alone in this, many firms are reducing head count and many startups are finding themselves without series A or B funding; they’re closing their doors because the money is being directed to more stable ventures.

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This week’s news includes:

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Analyst Draws Connection To Netflix Growth and 360 GoldAnalyst Draws Connection To Netflix Growth and 360 Gold

netflixThe famous Michael Pachter, industry analyst has been drawing some strong connections between Xbox 360 gamers and the Netflix subscriber base since 360 launched their Netflix addition. Our family has seen the same thing, we signed up for Netflix a few days after it arrived on the Xbox 360 firmware launch.

Oddly enough, we’ve not used the Netflix addition to the Xbox 360 much after subscribing for Netflix. We’ve utilized the DVD shipment feature and we’re using the Tivo version of Netflix for the living room. Although we’ve found the Xbox 360 Netflix version is much more user friendly and fast.

“Pachter estimates that roughly one million Xbox Live Gold members are also Netflix subscribers, and that 200,000 or so of them signed up for Netflix after the debut of the New Xbox Experience in late November, 2008.” (joystiq)

Prachter believes 35% of all new Xbox 360 purchasers will sign up for an Xbox Live Gold account. He expects “as many as 1 million [XBL Gold members] join as Netflix members in the next year.” We’re fairly certain the Netflix and Microsoft Xbox 360 partnership was a well thought out plan to expand their domination in the industry.

Of course, as we’ve seen, Netflix didn’t just stop at Xbox 360, their Tivo solution is another great way to leverage your downloadable video content. Now, we just have to hope we don’t blow through the 250GB cap Comcast supposedly contains.