In-Depth: Sony Threatens Microsoft's Non-Gaming Dominance

[As Sony announces a tie-up with Vudu for HD movie streaming, Gamasutra editor-at-large Chris Morris looks at how the PlayStation 3 creator has started to gain ground on Microsoft's array of on-console media content -- the next big battlefield for game consoles.] Long before Kinect, Microsoft had its own way of courting the non-gamer – offer functionality on the Xbox 360 that was unique enough to lure in people who weren’t interested in the latest Halo installment. And it was a pretty effective method. With Netflix integration leading the charge in 2008, the Xbox 360 finally fulfilled the dream of the console as a Trojan horse of the living room. It gave the company a huge competitive advantage for a while, but recently that advantage has been slipping away. Sony, in particular, has gained a lot of ground in that battle and is threatening to overshadow Microsoft’s achievements. The latest blow comes with today’s announcement that the PS3 is adding the Vudu HD streaming service to its arsenal later this month. Owned by Wal-Mart, Vudu is a viable competitor in the film streaming marketplace with day and date releases consecutive with home video (as opposed to, say Netflix, which primarily streams catalog content). The PS3, of course, has had Netflix since 2009 and recently integrated the service onto its dashboard (as Microsoft’s exclusivity window for that sort of tie-in expired). It’s worth noting, though, that PS3 users were able to search for Netflix content before those on the 360. The PS3 is also currently the only console that offers access to Hulu Plus. While that streaming service has come under fire during its beta period for high prices and embedded advertising, it’s still something that has generated tremendous consumer interest. (And the rumor mill suggests that $10 monthly fee may come down to $5 as the service becomes more widely available.) Microsoft is hardly standing still, recently launching ESPN content for Xbox Live gold members, with 3,500 live and on-demand events coming to Xbox Live, ranging from college football and basketball to soccer, major league baseball and NBA games. Given the demographic crossover between sports and gaming, that could be a major draw. It also has an exclusive tie with Last.fm, though a very unscientific survey of posters on the forums of a large gaming site, indicates that usage of that service is moderate at best – with several users not even knowing what exactly what Last.fm is. The company has also vowed to add Hulu Plus with “signature features” next year – but its heart just doesn’t seem to be in the fight quite as strongly as it used to be. Once a year updates are fine, but don’t convey a sense of urgency and excitement. Sony, with its more rapid release schedule, appears to be making the integration of this non-gaming functionality a priority. “I think it’s a mandate with Sony not to just catch up with, but to surpass Microsoft, especially in the non-gaming functionality,” says Billy Pidgeon, senior analyst with M2 Research. “What’s at stake here is the future of Xbox Live and the PlayStation Network, … We’re going to be seeing more houses where there are two or more consoles - and the battle will come down to where do (non-gaming) family members spend their time?” What’s ironic about the Vudu integration is that the service will compete with Sony’s own online movie store. Given Vudu’s owners, though, it’s still a smart move to make. Having Wal-Mart obliged to you as you enter the back half of a console’s life cycle is never a bad thing. “I think it’s kind of smart of them to do this,” says Pidgeon. “It’s better to give people more options. [Vudu] does compete against their own service, but it helps Wal-Mart and Wal-Mart will help Sony. It’s coop-etition. This is the point in the lifecycle where people should be experimenting with things - and if Sony is able and willing to do that, then I see that as a positive.” With the launch of Kinect and Move, the focus of the battle for casual and non-gamers has turned back to the gaming arena – and that’s certainly something Microsoft and Sony are more familiar with. But by offering non-gaming entertainment, the companies open their systems up to a much wider audience. And given the ground the PS3 has to catch up with, that focus is a sound one. Life-to-date, the 360 has sold 21.9 million units, according to NPD research shown by Nintendo of America president Reggie Fils-Aime at an analysts’ conference last week. The PS3 has sold 13.5 million. “Sony has a lot more ground to cover,” says Pidgeon. “They’re in more of a catch-up mode. And I can see them doing something further along these lines – like striking a deal with Google for Google TV [integration].” Interestingly enough, Google TV is already integrated into select Sony TVs. And cross-system pollination is a priority for Sony, which makes that idea a viable one in theory. On the whole, Sony is lagging behind in the DLC world – and it knows it. With the gaming audience open to buying and streaming content online, the PS3 is a natural candidate to lead the charge – something that has not gone unnoticed in the executive suite and may be behind the ongoing push of non-gaming features. “Sony has got to get digital and has got to get networked,” notes Pidgeon. “That’s from [CEO Howard] Stringer on down.”