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Pachter: New Xbox could be subsidised by cable companies

2014 machine likely to heavily engage TV audience, says analyst

Wedbush Securities analyst Michael Pachter has predicted that the next Xbox won't be seen until 2014, and is likely to have at least one SKU which sees the hardware subsidised by a cable TV company in exchange for a subscription contract.

Speaking to X360 Magazine, Pachter pushed his launch predictions a little further into the future than most, saying that a release in spring 2014 meant that Micrsoft's target audience could buy themselves a console during a period when they weren't expected to be buying presents for family, something which he thinks would damage a Christmas release.

However, Pachter also thinks that "only a few million units" would be manufactured for the launch period.

Perhaps more interestingly, Pachter sees the cable and satellite TV providers playing a major role in making Microsoft's next machine affordable to the masses.

"It's pretty clear to me that Microsoft intends to allow the Xbox 720 to function as a cable TV box," says Pachter, "allowing cable television service providers to broadcast over the Internet through the box, with SmartGlass as the remote controller, and with the Xbox 720 using Windows 8 to split the TV signal into multiple feeds, allowing consumers to divert different channel feeds to different displays within the home."

That close association with TV providers is about much more than just offering better services, Pachter believes. By tying in a long-term contract with a satellite or cable television provider to the purchase of the console itself, Microsoft can offer a more advanced machine for less, in much the same way as it has with the $99 360 with a two-year LIVE contract.

"I think this is the biggest part of the next launch," Pachter continues. "It will allow Microsoft to participate in the cable TV monthly subscription. There are 85 million households in the U.S. with either cable or satellite TV, and if Microsoft could sell half of them an Xbox 720 and collect a $5 monthly Xbox Live Gold fee from each of them, we're talking huge profits.

"This suggests to me (along with the current $99 Xbox 360 financing plan) that Microsoft will seek to get a cable TV provider to subsidize the cost of the box, meaning that we might see an Xbox 720 for $99, if the customer commits to a cable TV subscription for two years."

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