"I’ve been asking the crucial question: how can interactive entertainment become as approachable as other forms of entertainment? The vast majority of people are just too intimidated to pick up a video game controller…Despite the size of (the video game) industry, still 60 percent of households do not own a video game console…The only way to bring interactive entertainment to everybody is to make it invisible."

The implications of Project Natal go beyond entertainment.  TV manufacturers are already looking at building motion sensing and voice detection technology into TVs.  This means you can not only control your TV with voice and motion, but interact with all types of content – training programs, commercials, remote physical therapy and more.

For a quick look at how this works, watch this demo video.

Rumors are starting to  run rampant that the XBox will beat the Wii’s casual gamer friendly motion sensing game controller by simply getting rid of the controller.  In what may be an E3 announcement, XBox will use their 3DV acquisition to turn your body into a controller.  The rumored XBox Fluid will use a camera to detect how your body is moving in order to let your body be the controller.  So if you want to play a boxing video game, just box, don’t hold a controller.

But the implications go far beyond video games.  As friends of mine who run Omek Interactive, a developer of motion sensing software for games and other applicaton, points at as that as the cameras become more precise, your body motions can become tools for a range of controls from controlling the TV (no more looking for a remote) to precise fitness training.  A while back they showed me a boxing demo that was able to detect the accuracy and speed (read: knock) of a punch.  That ability can be used for remote physical therapy, remote training (golf at home), and, yes, better video games.

As Connected TV’s become commonplace, this type of technology can allow people to work remotely with training professionals and play physical games such as tennis without being on the same court.

(Shameless plug – check them out at http://www.omekinteractive.com/)

Here’s a decent demo video of the technology.

But the implications go far beyond video games.  As friends of mine who run Omek Interactive, a developer of motion sensing software for games and other applicaton, points at as that as the cameras become more precise, your body motions can become tools for a range of controls from controlling the TV (no more looking for a remote) to precise fitness training.  A while back they showed me a boxing demo that was able to detect the accuracy and speed (read: knock) of a punch.  That ability can be used for remote physical therapy, remote training (golf at home), and, yes, better video games.

As Connected TV’s become commonplace, this type of technology can allow people to work remotely with training professionals and play physical games such as tennis without being on the same court.

(Shameless plug – check them out at http://www.omekinteractive.com/)

Here’s a decent demo video of the technology.

3D camera technology can tell if you’re kicking, punching, swinging a golf club and more.  In other words, you can turn on the TV by just moving your hand, turn on a video game by pointing to it and then play all those Wii like games but with more accuracy and without a controller.  The technology is actually available today so manufacturers are not simply exploring technical feasibility, but how to roll out and market it.  CES 2010?

For years, I’ve been talking about a day when you bring home your TV, plug it in to an electrical and broadband outlet, and start getting a range of content and applications – no boxes or cable needed…cable companies would become bandwidth utility companies.  

According to The New York Times, LG is launching a line of, what they are calling, Broadband HDTVs,  which will stream Netflix’s instant library directly to the TV – no PC, set top box, online DVD player or other device needed. 

The implications are enormous both in how this impacts both other industries as well as at how it may accelerate the changes in consumer behavior.

Three Major Industry Impacts

There are many potential changes coming but here are my favorites.

Cable companies – People are shifting their habit to watching TV when they want, not when programmers want.  Cable providers will have to create whole new content and programming strategies that include applications, dynamic on-demand programming, community building and other Web like programming services.  Failing this, they won’t go out of business but may be relegated to bandwidth utility providers.

Application developers – The is on it’s way TV to becoming come the new development platform for consumer, communications and other platforms.  Consumers have flocked to sites like Hulu because they weren’t available on TV.  Now that the day is in site where consumers can play games and watch Hulu on demand on a big screen, they’ll flock back to the couch…and developers will follow.

Video game industry – Assuming that TV manufacturers are thinking of one day licensing video game platforms, then video games have two huge opportunities.  The first is more gaming on demand.  Already, downloading to console stores from XBox, Playstation 3 and the Nintendo Wii allow more demos and sales of video games.  Allowing people to download straight to the TV means more game sales (the real money…those consoles are money losers) as you don’t need to have people invest in a console first.  The second impact is more explosive growth in casual games.  TV watching is a community activity as are casual games.  Now you can play a quick game of checkers or run a virtual football play with a remote friend during breaks in the real game.  So when do I get my new XBox Broadband HDTV?

The marketing and advertising industry – Broadcast commercial, meet the Dodo bird.  Everyone’s been talking about the demise of the traditional TV commercial but, to date, there has not been enough brand-safe (UGC and illegal video is not) online video inventory.  In addition, Americans are watching more TV than ever.  But if that TV watching becomes watching streaming on demand through a broadband HDTV, then the marketing industry can see some serious, and very lucrative, changes.  Ads and branded shows can be delivered on a more targeted and personalized basis with follow through actions…such as ordering a pizza mid-movie.

Video content will be created specifically for the Wii with cartoons being cited as the first example.  There will be a mix of paid and free content.

There are a few interesting points to note:

1. I’ve been waiting.  The Wii has the most intuitive channel (as in TV channel) interface.  It’s easy enough that my kids would probably prefer watching video through the Wii than flipping through the cable remote.
2. Is this a partial story?  I’m assuming a December 25th story means either it’s bad news (not the case) or it was leaked the Reuters rushed by print it (my bet)
3. The are launching with a cable like model of paid  premium and free entertainment.
4. The article implies that Nintendo and Dentsu are matching the content to the demographic.   They are producing for the Wii so that, like the video game strategy, they are not being all things to all people, but offering a specific type of content to the Wii demographic (just as casual and easy games are specific to the Wii demographic).
5. A video distribution service by an ad agency?  Does this show a new era of monetization where you don’t create and pray for money, but create with the money?

And what are the implications?

Bandwidth providers have to change their models.  I’m betting them get out of the entertainment game and end up providing tiered bandwidth along with partner devices…similar to where wireless carriers have been heading.  So, the next generation may decide they want AT&T bandwidth with the entertainment that comes along in a Wii set top box just as today we choose AT&T Wireless with the content and services that come with an iPhone or Blackberry.

Here are a few links of interest outlining the argument.

1.  News.com’s article making the recession proof argument.
2. Fast Company’s World of Warcraft argument.
3. NPD Group saw strong video game sales in October.  Economy going down the tubes?  No better time to blast away in Halo.
4. Rafe Needleman of CNet’s Webware is compiling a list of open positions.  The company with the most so far? Casual video game company Big Fish Games. 

We’ll look forward to holiday sales as the final measurement.

The latest Entertainment Software Association survey (read it here) found the following:

• 65 percent of American households play computer and video games;
• 38 percent of American homes have a video game console;
• The average game player is 35 years old; and
• One out of four gamers are over age 50

If video games are not only popular but truly spreading across all demographics, then maybe this will open more doors to marketing through video games to households instead of to college apartments.    We’ve already seem some examples of general consumer product placements in video games (the Sims example with McDonald’s).  Maybe it’s time for more?

Here’s what they have so far:

• Lord of the Rings: Conquest – E3 2008 interview
• Final Fantasy XIII – E3 2008 Trailer
• Gears of War 2 – E3 2008 Trailer
• Resident Evil 5 – E3 2008 Trailer
• The Last Remnant – E3 2008 Trailer
• Fallout 3 – E3 2008 Perfect Life Trailer

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