Microsoft, Verizon Aren't Playing Games

LAS VEGAS -- Consumer Electronics Show (CES) -- Here at CES, companies such as Verizon Communications Inc. (NYSE: VZ) and Microsoft Corp. (Nasdaq: MSFT) are making it clear that gaming can't be taken lightly in the world of next-gen communications services.

Microsoft puts the X in IPTV
Microsoft shocked the world here Sunday when it demo'd IPTV using an Xbox 360 gaming console, instead of a traditional set-top box, to decode TV signals and provide channel changing capabilities. (See CES: Gates Gripes About Connections and Microsoft Adds IPTV to Xbox.)

That kind of news could pose a threat to set-top box makers such as Cisco Systems Inc. (Nasdaq: CSCO)'s Scientific Atlanta group.

But David Davies, Scientific Atlanta's VP of strategy and product marketing, says the Xbox demo is par for the course. "Consumers will want content delivered to them by different devices," he says. "Our value proposition is in helping consumers network their devices and unify the screens in their lives."

Chris Dobree, director of business development at Cisco, isn't rattled either. He says the Cisco view of the gaming console is that it's "just another endpoint" in the consumer home network.

While Microsoft has admitted to talking with different service providers about using the Xbox as a delivery mechanism for IPTV, Microsoft TV content marketing manager Stephen Petheram says the purpose of the Gates demo was really to show off a concept to consumers that their Xbox can be used for much, much more than games.

It also helps service providers look at Microsoft's installed base of gaming consoles in a much more favorable light. "If you're a telco, you can capture some of the 18- to 35-year-old market because they might already have an Xbox," Petheram told Light Reading on Thursday.

At the Microsoft booth, the Xbox was being used in another snazzy demo. When a consumer uses a Windows-powered Media Center PC as part of her living room entertainment center, that PC –- and all the live or recorded TV content it can access -– can be remotely summoned from any room with an Xbox 360 console. The console's set-top extender capability can make use of a WiFi link or an Ethernet connection to do the job.

In either case, it could potentially save consumers hundreds of dollars by allowing TV content to be viewed in different rooms without requiring the purchase of an additional set-top box.

Verizon plays with virtual currency and virtual LANs
Verizon already has Playlinc, a free service that lets consumers host games on their own PCs, and invite friends to private Internet gaming sessions. While shooting each other up, users of Playlinc can chat via an instant messenger client, talk to up to 32 fellow gamers at a time, and browse other games -– all for free. (See LR Names Leading Lights Finalists.)

So what's next? Verizon has a PayPal-like service called EZPay, which allows Playlinc users to purchase games and gaming subscriptions by adding the tab to their broadband bill.

Jason Henderson, Verizon's Games Product Manager, says that by the end of March, Verizon should be able to allow EZPay users to add items to any existing Verizon bill. Alternately, users who don't have any Verizon services can just have an EZPay account tied to a checking account or credit card.

Once that's turned on, there's no limit to the kinds of digital goods Verizon could offer, since it would have a slick way to instantly bill in the real world for services bought online.

Henderson says he's also going to encourage developers to build software just for the Playlinc environment. All Playlinc really is, he says, is a free virtual LAN connection with integrated communications. If developers write software for that platform, Verizon could potentially provide all kinds of collaborative computing services.

"What's the killer app for a virtual LAN?" Henderson asks. "We've got Half Life 2 in the gaming world. I wish we had something like Half Life 2 For Meetings."

— Phil Harvey, Managing Editor, Light Reading