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Time Warner Xbox? Cable companies target consoles with streaming games

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Will television be the savior or the death of the video game console business?

The entertainment singularity probably isn’t coming this decade. There will be no single utopian device that you plug directly into your body, acting as PC, phone, television, library, filing cabinet, and video game console simultaneously. Keep waiting. The convergence of disparate entertainments as single services, however, is continuing apace. Much as Apple’s iPod became the nexus of portable entertainment last decade, giving you movies, music, and games everywhere you go, video game consoles are expected to be the nexus of the living room. Rumors are that Xbox Live will transform into your cable service on Xbox 720. Nintendo is staking its claim with Wii U’s Nintendo TVii. The best video games and all the television and movie services available, pumped out one box. That’s how game console makers hope to survive.

If cable companies have their way though, they’ll be able to cut the game console makers out of the equation entirely. Verizon, AT&T, and Time Warner Cable are all planning to make video games a key component of their cable services going forward.

Bloomberg reported on Tuesday that all three of those cable companies are preparing cloud-based streaming gaming services, not unlike OnLive and Sony’s recent acquisition Gaikai. Testing is set to start by the end of the year with the services debuting in early 2013. Other sources said other premium TV providers will follow Time Warner, Verizon, and AT&T in 2014, right as the next generation of game consoles like Xbox 720 and PlayStation 4 are getting established in the market.

Games are already available through a number of television services, and through many televisions themselves. Samsung Smart TVs already carry casual gaming mainstays like Angry Birds. These new services, however, will look to offer streaming versions of AAA games from publishers like Electronic Arts.

The thinking is that cable companies might succeed where startups like OnLive failed because of their existing infrastructures. Cable companies already have massive data centers, so re-appropriating them for gaming networks will be easier and cheaper then building them from the ground up. What they don’t have though are the pre-installed communities of gamers that console services like PSN, Xbox Live, and PC services like Steam have. Cable companies could easily fail at penetrating the gaming market because they lack experience establishing online gaming communities.

With consumers abandoning premium TV services for streaming alternatives like Netflix, cable companies would be foolish to try and compete with gaming machines when they could partner with them instead. The rumors that Microsoft is looking to partner with a cable provider like Comcast to sell the Xbox 720 as a subsidized cable box alongside a subscription contract rings true. That scenario makes the most business sense for both industries.