Microsoft's bid for the Xbox games console to become the home entertainment hub of choice ramps up a gear with today's release of the Xbox 360 Elite.
Retailing for about €460, the sleek black console has a large 120 gigabyte hard drive and includes a high-definition multimedia interface (HDMI) port for connecting to HD-enabled TVs.
Clearly the play now is to generate additional revenues from the use of the Xbox online service as a rival to iTunes and not just for internet gaming. In the US, providing film and TV content on-demand has been a huge success for Xbox. Leading names such as Paramount, Disney and Warner are among the content owners that have provided 2,350 hours of entertainment, which have generated about 10 million downloads since the start of the year.
Although no date has been set for a launch in Ireland, Microsoft has said it will expand video services to Europe this autumn.
Orla Sheridan, country manager for Microsoft Ireland's entertainment and devices division, says Ireland, along with Britain, France and Germany, will be one of the first countries to get it.
Nostalgia gaming has also proven lucrative for Microsoft with evergreen favourites such as Sonic the Hedgehog, Pac Man and Street Fighter available to download for a fee. Microsoft says there have been more than 45 million Xbox Live Arcade game downloads and about 100 titles will be available by the end of the year.
"It's no surprise that at 11 o'clock on Friday and Saturday night, the stats here for usage [ of arcade] go up," says Ms Sheridan, adding that about 45 per cent of Xbox owners connect to the Live service after purchase.
Sony has a similar feature to Xbox Live called the PlayStation Network but it focuses on facilitating online gaming more than downloading original content.
Sony's drive for the living room will confront Sky head-on with the announcement this week at the Leipzig games show in Germany of PlayTV, a device that will allow digital television to be viewed and recorded on the console in a similar way to a Sky+ digital video recorder (DVR). It will not be available in Ireland until mid-2008 at the earliest.
Microsoft's entertainment and devices unit has yet to turn a profit, largely due to the expense of producing each Xbox, while development of the PlayStation 3 has also contributed to record losses at Sony.
Moving into new areas will help drive profits of both platforms in the long run but it is sales of games on DVD at retail that will make the impact in the run up to Christmas. It is a strategy that has worked well for Nintendo's Wii which has been outselling both Sony and Microsoft in key markets such as the US and Japan because of a focus on innovative game play.
As of June, cumulative sales of the current generation consoles in the US saw Microsoft, which has a head start on its rivals, leading the way with 5.8 million units, Nintendo with 3.2 million and Sony on 1.5 million, according to market research firm NPD Group.
In Ireland Microsoft is claiming more than 45 per cent market share based on its own analysis, but it has had a 16-month head start on the PlayStation 3.
This week Microsoft trumpeted figures from Gametrack which showed it had sold 5.5 games per console since the Xbox 360 launched in November 2005.
Games for the PlayStation 3 and Xbox 360 retail for about €60, while Wii titles are around the €50 mark.
Microsoft's trump card is next months release of Halo 3, an event that is being likened to to the release of a new Harry Potter movie. "We wouldn't be happy if this was just the biggest game of the year," says Ms Sheridan. "We want this to be one of the biggest entertainment launches of the year."
Sony is also likely to have to respond to Xbox price cuts of up to €50 on some models to make way for the Elite. Both sides have responded to the Wii's US success by slashing prices.
Such intensive competition can only benefit gamers, and in many cases the parents who support their habit, in the run-up to the Christmas period when the games industry does over half its business.
