The Wii U will help make video chat mainstream

CE manufacturers and services like Skype and Logitech Vid (s logi) have long promised the ability to video chat with friends and family from the comfort of one’s living room, but so far, the consumer video chat market has been largely confined to the PC, with mobile video chat becoming a somewhat recent phenomenon. But video chatting from the couch might no longer be some Jetsons-esque fantasy: Video chat technologies are beginning to appear in game consoles, making them available to the wider mass market.
The new Wii U controller — just announced this morning — has a video camera built in, opening the door for video chat in the living room to a whole new generation of gamers. For many gamers — especially youngsters that Nintendo targets — the Wii U will be the first mass market device to enable them to video chat with their friends.
But Nintendo isn’t the console maker seeing this opportunity. Last fall, Microsoft (s MSFT) introduced its Kinect gesture control system, which also has a built-in video camera and video chat service, Video Kinect. Microsoft has already sold 10 million Kinect units, and by combining its existing video chat services with the newly acquired Skype service, Microsoft could instantly have not just a huge install base of video chat users, but the ability to reach tens of millions of them in the living room.
There’s a growing demand for video chat from consumers, as seen by the rush to let users connect with one another on mobile devices. But video chat implementations in the living room so far have been disappointing. Making video chat services available through game consoles removes a lot of the friction and cost that has historically kept those services from going mainstream. They don’t need to install software on a TV or a set-top box to make it work, nor do they have to even buy any peripherals — like a special webcam — to make the services work. Instead, video chat is just there, as an added bonus on a piece of hardware they bought for another purpose.
Just as consumers bought the Xbox for gaming but later discovered other applications — such as watching streaming videos from Netflix (s NFLX) — they could also begin leveraging the gaming machines they already have to chat with friends from the comfort of their living rooms.
All of which is to say that while video chat applications on game consoles are positive for the market as a whole, they’re bad for standalone hardware manufacturers or peripheral makers that are looking to latch onto other services. Cisco, (s CSCO) for instance, has had a hard time gaining traction for its incredibly overpriced Umi consumer video chat service. Meanwhile, companies like Logitech — which makes many of the peripheral video cameras for connected TVs — will have a hard time competing with video cameras that actually come as a part of the Wii U controller or Kinect system.