Coming Soon to Your Xbox: A TV Channel?

Xbox users could soon have another reason to cancel cable: former News Corp. (s NWS) President Peter Chernin is reportedly in talks with Microsoft (s MSFT) to create an Xbox-only TV network, according to Bloomberg. The channel would feature exclusive programming, as well as reruns of TV network shows. Microsoft and Chernin haven’t publicly commented on the plans, but Bloomberg was told by an insider that the two parties discussed the station during a meeting earlier this month. Chernin apparently proposed joint ownership of the network.
This isn’t the first time reports about Microsoft’s ambitions to turn its game console into a device competing with your cable box have surfaced. Deadline Hollywood reported last week that Conan O’Brien was in discussions with the company to produce a show exclusively for the Xbox Live audience before he eventually settled for his new TBS deal.
The New York Times reported in January that Microsoft has been in discussions with ESPN to bring live sports to the Xbox. Microsoft has also been offering Hollywood fare on demand through its Xbox live marketplace, and Netflix users can access the company’s Watch Instantly service through the console. And then there are Microsoft-sponsored shows like The Guild, which has seen more than six million downloads during its first two seasons via the Xbox Live marketplace alone.
Still, running an Xbox-only TV network would come with some challenges for Microsoft. Bloomberg reports that Chernin proposed to increase the Xbox Live subscription price by one or two dollars per month to finance the network, but it is unclear if gamers would really be willing to pay more to receive TV content in the age of Hulu & Co.. Advertising would be another option, but is the network going to have a large enough audience to compete with cable channels for a piece of the ad cake? And finally, are users really going to want linear programming, especially if much of it will consist of reruns and other non-live content?
That being said, an Xbox live TV network also raises some interesting questions for the existing TV networks and cable TV operators. It seems like only a matter of time before someone will use either the Xbox or another over-the-top platform to deliver network content to an audience that values its broadband connection more than its cable subscription. If nothing else, we can expect game consoles and other over-the-top options to become a huge bargaining chip in the ongoing negotiations over retrans fees. Broadcasters will simply say: Pay us more — or we’re going to shift our cable franchises to the Xbox.
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