Microsoft used Chairman Bill Gates' annual CES keynote address to showcase many things, most of which were PC-related, but included in the batch was the integration of Microsoft's Xbox 360 and Xbox Live with its Microsoft IPTV platform, coming to the market by Christmas 2007.

Xbox Live is the online social community that today is engaged in using Xbox consoles in multi-player games that operate over the global Internet (see story on page 30). It integrates add-ons such as presence and voice over IP to allow players to talk as they play. The integration of Xbox Live and IPTV brings all of that functionality, including a great deal of social networking, to the living room, said Ed Graczyk, director of marketing and communications for the Microsoft TV division of Microsoft.

“You can be watching a basketball game and have an Xbox Live friend send you a text message — it pops up to ask for chat on your TV screen,” he said. “You can take advantage of the buddy list and know who's available through presence capabilities, and it's all integrated into the TV experience.”

More important for Microsoft's 16 service provider customers, the integrated Xbox/IPTV set-top will only be distributed through service providers, Graczyk said. “This is a very big competitive differentiator for them.”

Verizon is expecting its second generation of FiOS TV to also provide significant differentiation from cable offerings. The company plans to “turn up the bandwidth on television” and take greater advantage of its FTTH network, in part by delivering Web content, including video to the TV set via the in-home network ties between PCs and set-tops, said Denny Strigl, president and chief operating officer of Verizon.

The company will enable consumers to search Web video content and other video content, using a variety of parameters, to make it easier for them to access the burgeoning array of available content.

“The integrated search function will enable customers to be able to scan through hundreds of broadcast channels and thousands of on-demand videos,” said Bob Ingalls, executive vice president and chief marketing officer of Verizon Telecom. “We are deploying middleware on set-top box that will enable the FiOS digital media experience. This will leave cable in the dust.”

With AOL TV soon to be available on Sony TV sets, and Apple, Google, Yahoo! and start-ups such as MediaZone, TVNGO and others all offering different versions of Web video for living room viewing, consumers may find themselves inundated — and confused.

More than likely, Briere said, there will be some early shakeout in the market.

“Eventually, all content will be available everywhere, with a few notable exceptions, like major ballgames or concerts,” he said. “On the consumer electronics side, what you are trying to do is build a bigger value proposition than the telco can do with its bundling.”

WEB-TO-TV LINKS