New CableCARD rules create new potential for Media Center

Back when Microsoft announced support for CableCARDs, there was widespread excitement around the commitment Microsoft had made to the future of Media Center and high-definition television (at least stateside; a bit less hi-def love has been doled out to our friends abroad).  Yet, when the news came out about the serious restrictions around CableCARD, there was a mixed reaction at best.  Yes, the restrictions were a big set back for the enthusiast market and for those who had already invested in hardware for existing Media Center installations. However, there were reasons for some optimism: 

1) Many (including myself) believed that in good time a hack/work-around would be available in short order so that anyone could easily attach a CableCARD tuner to any PC.  

2) Microsoft telegraphed that it was hard-as-nails to even get what they got past CableLabs, and to hold tight because they were going to keep plugging away to open things up.

The first reason eventually came true, but at the time I never would have guessed it would had taken over two years!   The second reason seemed like an empty promise until Microsoft unleashed a bombshell of openness on us this week when they announced the lifting of several serious restrictions on CableCARDs and Media Center, including: removing the OEM cable-ready requirement, removing DRM encryption for most digital content, and adding support for switched digital video (SDV). 

Now, finally, we have something to work with.  The removing of the OEM cable-ready requirement opens up potential for the platform like no new feature could.  For starters, starting with Windows 7 — reportedly the most robust, fulfilling Media Center version yet — anyone who has a PC today can turn their XBox 360 into a cable box killer tomorrow.

This opens up a few markets.  First, the simple win: there’s a new market for all the current enthusiasts’ friends and families, who previously wouldn’t invest in a whole new PC and accessories to enjoy Media Center.  Starting with Win 7, many of these hold outs might now invest the extra $200-$400 and plug in a USB CableCARD or two to get rid of their $15/month Cable box.  True, the math isn’t great (with a 12-month recoup timeframe for each CableCARD), but the additional benefits of switching to Media Center help bias the equation, not to mention the existing disdain out there for monthly cable bills.  Prior to Win 7, you really needed to be passionate to go digital cable with Media Center, but with the restrictions lifted, it’ll be much easier to get the intrigued audience to jump aboard.  An intrigued market is larger than a passionate market, but it’s by no means a huge market (I can hear Chris Lanier in my head right now saying that the enthusiasts’ friends-and-family market would still be a drop in the proverbial bucket for a company the size of Microsoft — which I completely agree with). 

The next market is a bit more interesting.  We’ll have to see how Microsoft decides to play it, but in a few months, there will be millions of people with a Win7 PC in their homes.  Some of them will already have Xbox 360s, and some won’t.  For customers who have both, Microsoft has a unique opportunity to connect their Win7 boxes with their Xbox’s, which creates an interesting narrative for Microsoft to share with content providers:  “We’ve put in place a Microsoft-managed aggregation, delivery and home distribution platform for broadcast, cable TV, and internet content.  Would you like to learn more about aggregate viewing behaviors across mediums?  Or maybe you want to sponsor something in the stream we are enabling?  Let’s have lunch.”  For those who don’t have Xbox 360s but do have Win7, Microsoft has an equally interesting opportunity to sell Xbox 360s to a new, non-gaming market through a Give Back Your Cable Box campaign where Microsoft can not only save customers money in monthly bills (compelling in this economy), but arm them with the ultimate home invasion technology that will not only replace their cable box, but give them a great entertainment device as well.  In this scenario, the “X” in the Xbox 360 finally starts to resonate — it’s clearly more than just games.  It can now be marketed as a set top box that reduces clutter, boxes and monthly fees (oh, and it’s a kick-ass game machine that will Natal your pants off soon, too). 

[This is all presuming, by the way, that there will be no other competing extenders in the market.  I’m not entirely convinced of this, but for simplicity’s sake, let’s just assume that the Xbox 360 will be the only viable extender.  And keeping with this simplicity, let’s also assume any issues we as enthusiasts have with Xbox 360s as extenders are not a serious problem for most consumers.]

However, attempting to grow the Media Center / Xbox 360 market into the CableDVR market will require Microsoft marketing Windows 7 Media Center as a consumer product.  This means a multi-faceted campaign that includes (tasteful) “within Win 7” promotions, television ads, and preparing slick promotional materials around Win 7 PC showrooms across the nation.  Imagine again this Give Back Your Cable Box campaign theme where if you buy a new Win 7 machine and a digital cable tuner, you get an Xbox 360 at 1/2 price.  Included in this package deal would be a big, fold-out instruction manual that would be no more complex than that of a TiVo. 

Can Microsoft pull off such a feat?  Well, this is where I have my doubts.  Microsoft is a software company first, not a consumer-experience company.  Yes, they are trying.  And, yes, they are making progress.  And I do think they will eventually come around with some good consumer experience competencies as an organization.  But they’re just not there yet, and I’m not all that convinced that they’re keen to invest in market research business models like consumer behavior tracking, even if they decide to push the compelling linkage of Win 7 and Xbox 360.   It would take a lot of vision to bring all this together (which I think is within Microsoft’s grasp), but it would take a whole lot of non-engineering skills to implement a consumer-friendly roll-out, promotion, and support system along the lines of TiVo.  Unfortunately, I don’t think Microsoft has enough TiVo DNA in it yet to really pull it off.  I hope I’m wrong.

But, hey, even if the grand-takeover-of-consumer-eyeballs might be out of reach, at least now I will be able to evangelize and sell-through new media center installations to a new set of friends and family.  Everyone who experiences my Media Center-powered home theater loves it.  Soon, I’ll be able to honestly tell more people: “I have some good news; it’s now easier and cheaper than ever to add this to your home, too.”  

With these new digital cable restrictions lifted for consumers, Media Center is finally free to enable digital dreams for more people.