Kotaku is reporting that their sources have told them that the next Xbox, dubbed the 720 for obvious reasons, is updating everything about the console for a release in 2013.

The sources are claiming first and foremost that the next Xbox will do away with the DVD format opting for Sony’s industry standard Blu-ray format. A Blu-ray disc can hold either 25 or 50 GB and easily best the DVD’s paltry 9 GB.

The sources also claim that the next Xbox will ship with an improved Kinect sensor that would further Microsoft’s plans of having Kinect invade every living room around the world. They say that the new Kinect would feature an on-board processor, a feature cute from the original Kinect. This would allow the Kinect to detect motion more effectively while freeing up the resources of the actual console to do the heavy lifting when it comes to games.

The most interesting rumor to come out all of this though is the potential for Microsoft to equip the console with some kind of software that would prevent the playing of used games. This could either be done through tying each game to a person’s account or through something hardware related. It’s too early to tell and don’t take it as fact just yet. A move like that would be drastic and anger a large portion of the gaming community who rely on stores like GameStop to obtain cheap used copies of games.

Reports from IGN also indicate that Microsoft will be using AMD’s Radeon 6000 series of graphics cards to power their console. This would put the next Xbox at about six to eight times more powerful than the current Xbox 360 and two times more powerful than Nintendo’s Wii U console expected to launch later this year.

Fudzilla is also reporting that the CPU for the Xbox 720′s development kits are already going into production for a late 2013 release. Those within the industry are saying that Microsoft is on track to deliver Xbox 720 dev kits to developers as early as March of this year.

As with all rumors, especially the anti-used game system, take them with a grain of salt. If any of this is true, we should hear more about it in the months leading up to E3 in June.

THX Media Director is integrated into a number of home theater devices, including the Dune HD Max and Dune HD Smart B1 Blu-ray players, the Sharp Elite LED LCD TV, and Indy Audio Labs’ Acurus Act 4 preamplifier. The Dune HD players are currently available, and will have access to THX Media Director via an automatic firmware update.

THX has also partnered with several major content authoring companies to make the Blu-ray discs they create for the various entertainment companies compatible with THX Movie Director. The statement does not say what, if any, THX Media Director compatible content is already available.

[Source: THX Blog]

"Offering Blu-ray rentals is an exciting opportunity for redbox to expand our product offerings and build on the relationships that we’ve established with millions of consumers nationwide," said Mitch Lowe, president, redbox.  "Redbox is a convenient, affordable home entertainment provider and we’re delighted to offer consumers their favorite movies on the increasingly popular Blu-ray Disc format." 

"According to a recent report by the Digital Entertainment Group, sales of Blu-ray players increased 103 percent in the first half of this year," the company noted in its announcement. "The sale of almost two million set-top players during this time has increased the total number of Blu-ray players sold to an estimated 19.4 million, resulting in more consumers entering the Blu-ray rental market."

Redbox Blu-ray rentals will cost $1.50. Regular DVDs are only $1.00.

Redbox recently made public intentions to use a web service to expand its library, which would make it a much bigger competitor to Netflix. That appeared to be mostly forward-looking, however. It’s hard to say when that will happen, and what its offerings will be exactly.

Put simply, the battle for your living room and the dollars associated with your living room is heating up and I believe that 24 months from now there will be clear winners and losers. The next 24 months will likely represent the biggest changes we’ve seen yet for mainstream America’s media consumption.

First lets talk about the losers.

1. Cable and satellite providers. The economy is bad. There has never been a better time to cancel your cable and satellite service. As more and more digital media content is being made available through other sources, there becomes less and less of a reason to put up with overpriced cable and satellite TV. The service is bad, the service is expensive, and it’s a high reoccurring fee that is just the type of thing that consumers will look to cut out of their lives as they baton down the hatches. What’s more, Comcast is probably especially susceptible to losing internet customers in this downturn as well as they’ve received a lot of negative PR over their bandwidth caps which could increasingly hit consumers as more and more streaming video (and especially streaming HD video) comes into play.

The lone hold out will likely be the sports fanatic who simply cannot get by on network TV sports alone.

AT&T may fare better than traditional cable and satellite providers because they are aggressively rolling out their high speed fiber Uverse service and *requiring* consumers to buy their TV service in order to get the much faster than cable/dsl internet speeds. It’s kind of chump that they do this if you ask me, but hey, only the strong survive right?

2. Apple. Apple computer’s AppleTV has been a huge flop. Just like Thomas Hawk told you it would be over two years ago when I first dubbed AppleTV the iDongle. I followed that post up with another 10 reasons why the iDongle would fail about a year and a half ago. Apple’s mistake was that they sacrificed user functionality over a desire to tightly control your content and charge you up the ying yang for it. By not including a DVD player (something cheap and easy that they could have done) with AppleTV they force you to buy the content from them rather than more cheaply through a Netflix DVD subscription plan. By not including a DVR they force you to either pay them to watch your network TV commercial free or watch it without them and see the commercials. Apple really missed the boat with this one and could have been well positioned had they done like they did on the iPod and focused on the hardware and giving users functionality while not worrying as much about the content. In the end they would have made more money on both hardware and content, but as it is now the box is too restrictive and will be limited to a niche Apple fanboy audience who love anything Apple makes no matter how crappy it may be.

3. Roku. A lot of fanfare was made when the Roku box first came out with people saying it was the best thing ever, blah, blah, blah, blah. While having a few month lead time on comparable streaming Netflix boxes, as Netflix broadens their streaming service to other platforms it just won’t make sense to buy a Roku box when you can already get streaming Netflix on more popular and currently owned devices. More on the Roku here.

4. Movie Theaters. A lot of people say that the movie theater business will be resilient in this upcoming downturn in the economy. After all, movies thrived during the Great Depression right? True point. But back in the Great Depression there was no HDTV, no Netflix, no DVDs, no giant plasma TV screens or home theater sound systems. The movie theater has been a rip off with greater home entertainment competition for the last 3 years, but the economy has been good and people still went to the theater anyways (albeit in declining numbers). Not anymore. Watch the movie theaters go the way of the dinosaur as the consumer tightens back and chooses more economical entertainment at home vs. going out. If you’ve always wanted a photograph of your favorite theater’s neon sign, now’s the time to get it before they go out of business.

5. Blu-Ray. Blu-Ray players and discs are too expensive and a rip off. Sony won the battle by becoming the de facto high def DVD standard after wiping HD DVD off the map, but they lost the war. With streaming high def content and free OTA HDTV there is no need to pay all that money for Blu-Ray.

Now on to the Winners.

1. Netflix. Clearly Netflix has made the right move in investing so heavily in streaming technology. Netflix’s DVD rental and watch now service are both winners. In the past week we’ve seen announcements that Netflix will begin streaming it’s service on both Microsoft XBox 360s and TiVo units. If you have either of these units there is a strong case to be made that with a three disc Netflix plan for $19.99 a month you can have better content to watch at any given time than you can with your cable or satellite provider. If I were Netflix I’d start pumping this message big time. Why pay Comcast or DirecTV $80 a month when you can get better content from Netflix for $20. This is a clear value proposition for the consumer. Even in a bad economy people need something to distract them from their daily woes. And while people might not shell out $80 to take a family of 5 to the movie theater (parking, popcorn, soda, wayyy overpriced tickets, etc.) or pay $80 a month to Comcast or DirecTV for TV, they will pay $20 a month to get a very strong substitute from Netflix.

2. Microsoft XBox 360. The new Microsoft XBox 360 is out just in time for Christmas and may be the most tempting thing for people to try and buy even in this bad economy. Microsoft and Netflix announced this week that they will begin streaming *high def*, yes *high def* content to this new box. They are going to start with only 300 high def titles, but watch for this to rapidly expand in the near future.

Microsoft’s going to try and get a pound of flesh out of you of course by requiring an XBox live "gold" membership which is also kind of chump in my opinion, but this new box is clearly a winner.

3. Microsoft Media Center. Microsoft’s Media Center technology is getting better and better. Charlie Owen, from the Media Center team over at Microsoft, put out a great post earlier this week highlighting some of the things that we have to look forward to with Windows 7.

Many of Media Center’s changes are cosmetic — a cleaner better designed layout and interface. But there are some substantive content changes as well. Probably most significant, the next version of Media Center will support the H.264 high def video format. This means that high def H.264 video files can now be consumed on your television through a Media Center PC or Media Center extender. The significance of this is that the H.264 compatibility opens up the Media Center to a very popular format used for cheap pirated video content. Now I’m not advocating video piracy with this post, but the fact of the matter is that millions of people watch pirated H.264 format video on their computers every year. Now instead of having to watch the latest pirated episode of Dexter on your computer alone, you can now actually watch it from the comfort of your couch with your XBox 360 Media Center extender.

The power of Media Center plays in perfect concert with the power of the XBox 360.

All XBox 360s act as Media Center extenders. This means that if you have a Vista PC in your home (and more and more people do/will every day) you can stream your photos, music, home videos, and TV complete with a DVR if you have a TV tuner in your PC.

Could be a winner / could be a loser

1. TiVo. TiVo is certainly a consumer favorite. People that own them are very, very passionate about them. In addition to a new DirecTV service coming out next year and current offerings on the cable company platforms, TiVo today announced their own partnership with Netflix in what has been a much talked about on again / off again sort of relationship over the past four years or so. Being broadly rolled out in December, the new service will put more than 12,000 titles on the TiVo platform coming from Netflix. The service won’t be available on all TiVo units (it will work on Series3, TiVo HD, and TiVo HD XL units) but makes a TiVo a much more compelling option for consumers.

TiVo already has one of the best DVRs in the business and this new Netflix streaming option makes it even more attractive. Still, TiVo is an expensive option. Consumers either have to pay a $12.95 per month annual fee with TiVo or they have to pay an additional $400 charge for lifetime service. These high fees may keep some consumers away from TiVo as an option. Also there is no confirmation yet from TiVo that they will be offering the HD streaming option that the new XBox 360 will.

Comments

Netflix said customers who own Samsung BD-P2550 and BD-P2500 Blu-ray players, priced at $400, can upgrade their device for free to enable streaming from the Netflix library of more than 12,000 movies and television episodes.

Customers of Netflix can visit its Web site to add movies and TV episodes to their individual queues. Those selections will be displayed on their TVs and available to watch through the Samsung players. Once selected, movies will begin playing in about 30 seconds.

"In its new form, Samsung Blu-ray players become the ultimate content delivery box, combining on-demand access to movies and music as well as jaw-dropping Full HD viewing," said Reid Sullivan, Vice President of Marketing, Audio/Video & Imaging at Samsung Electronics America.

"Samsung presents a new value proposition for Blu-ray players by positioning it as a portal to a world of engaging digital content, be it Blu-ray discs, movies from Netflix or other online content."

Netflix has reached similar deals with LG Electronics and has agreements to stream movies to Microsoft Xbox 360 videogame consoles and to a set-top box make by Roku.

Terms of the deal were not disclosed but Samsung said it is working with Netflix to integrate other products with the movie service.
 

This fall, the LG BD300 Network Blu-ray Disc Player will allow Netflix subscribers stream more than 12,000 movies and TV shows to their TV for no additional charge.

The new player will go on sale in the U.S. in September for under $500.

"As Blu-ray player sales are expected to triple in three years, consumers are craving content and seeking a premium home entertainment experience," said LG Electronics USA President Teddy Hwang.

LG and Netflix announced plans for a set-top box in January to stream movies and TV episodes from the Internet to the TV.

Netflix customers will be able to stream content in standard definition and not the high definition of Blu-ray. Netflix offers Blu-ray DVDs via its mail service and said last week it will test price increases for the high definition discs.

Netflix has struck a deal with Microsoft to allow Netflix member’s watch streamed content on Xbox 360 consoles and another set-top box deal with Roku and it plans to announce another partnership before the end of the year.

"LG Electronics was the first of our technology partners to publicly embrace our strategy for getting the Internet to the TV, and is the first to introduce a Blu-ray player that will instantly stream movies and TV episodes from Netflix to the TV," said Netflix co-founder, chairman and CEO Reed Hastings.

Reuters is reporting on comments by Aaron Greenberg, group product manager for the XBox 360, that Microsoft is not currently in talks with Sony or the Blu-Ray Association to integrate Blu-Ray into the XBox 360.

This is disappointing.

With Netflix and other major retailers offering Blu-Ray discs it’s unfortunate that in order to watch them you won’t be able to do it on an XBox 360 Media Center Extender anytime soon.

The beautiful thing about the XBox 360 is the consolidation that it represents into a single box. DVD player, extender unit for your TV and DVR, game machine, photos, music, etc. All in a single box connected to your television. A single box solution. No other set top box can do all of that. Certainly consumers want high def DVDs. The fact that Microsoft previously developed an add on for HD DVD speaks to that. The fact that there now seems to be no plans to integrate Blu-Ray, after that format has proved to be the survivor, seems short-sighted.

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Although Amazon’s move is not surprising the online retailer said it will continue to carry both HD DVD and Blu-ray formats. Amazon did say that Blu-ray titles have increased from just over half of its high-definition sales to more than three-quarters in high-definition sales since early January.

Peter Faricy, vice president of movies and music at Amazon said, "The high-definition landscape is rapidly changing, and consumers are looking for guidance on how to make the best high-definition buying decisions."

Recently more and more retailers and studios were backing the Blu-ray format by Sony, including Warner Bros. and Wal-Mart who announced it would begin to phase out the HD-DVD technology and move to Blu-ray exclusively last week.
 

Retailers let out a sigh of relief as the two-plus years of Toshiba and Sony going head to head over the next generation of DVD formats came to an end. Finally, a holiday shopping season will arrive with a clear winner in high-definition video.

“We carefully assessed the long-term impact of continuing the so-called ‘next-generation format war’ and concluded that a swift decision will best help the market develop,” Atsutoshi Nishida, President and CEO of Toshiba Corporation, said in a statement.

HD DVD presented a way for current DVD manufacturers to use their existing processes to manufacture the new disks. Blu-Ray will require some expensive overhauling to take place.

Blu-Ray offers more storage per DVD than HD DVD did, 75GB to 50GB. Though Hollywood studios were split for a while over the formats, they slowly shifted over to Sony’s version.

Wal-Mart may have been the biggest influence, as it arbitrarily decided to no longer stock HD DVD equipment or movies. The massive retailer opted to go Blu-Ray only, winnowing the field of competitors to one and removing a barrier that kept consumers from buying either Blu-Ray or HD DVD players.

The retailer is following in the footsteps of Best Buy, Netflix, Warner Bros. Studio, 20th Century Fox, Walt Disney Co and Lions Gate Entertainment.

On the Wal-Mart Checkout blog Susan Chronister writes," By June Wal-Mart will only be carrying Blu-ray movies and hardware machines, and of course standard def movies, DVD players, and up convert players.   Not sure of the short term pricing plans, but history tells us that as more people move to a new technology prices typically go down."

The move by Wal-Mart will likely put an end to the conundrum for both retailers and consumers about which format to back HD-DVD or Blu-ray. It also will cause Toshiba to rethink its position on the HD-DVD format and eventually phase it out as well.

Wal-Mart said it will continue to sell the remaining HD-DVD inventory that it has, but in less than 30 days it will begin to add Blu-ray in it stores. The move will affect all 4,000 Wal-Mart and Sam’s Club stores.

"We’ve listened to our customers, who are showing a clear preference toward Blu-ray products and movies with their purchases," said Gary Severson, senior vice president, Home Entertainment, Wal-Mart, U.S.