Until the latter half of 2006, awareness in the consumer high-definition video space was focused primarily on HD set-top boxes, televisions, pay-TV services, and digital terrestrial broadcasts. Blue-laser disc players under the Blu-ray Disc and HD-DVD banners arrived late in 2006, but with limited impact. However, with the entry of Sony’s Playstation 3 and updates to Microsoft’s Xbox 360, HD-capable game consoles are rapidly changing the role that these devices will play in the household and in the HD market overall.

The first, most noticeable impact of both consoles has been their role in driving blue-laser format penetration. Though neither blue-laser format has experienced substantial success in standalone player sales, consoles have proven more successful in stimulating uptake of both formats. According to analyst Paul Erickson of IMS Research, “The HD-DVD and Blu-ray Disc camps have both benefited greatly from the console market. The majority of the current blue-laser disc installed base is comprised of Playstation 3’s and Xbox 360 HD-DVD add-on drives, and this trend is likely to continue until standalone player prices drop well below current levels.”

The other significant impact caused by both consoles, is the expansion of the market for downloading and playback of HD content. Both companies envision the console as an ideal vessel for broadband content plays to the living room. Microsoft delivered first, and has seen surprising success in the uptake of paid video content via the Xbox Live Marketplace, surpassing several established online movie download services in less than six months of operation. Microsoft’s new Xbox 360 Elite, with six times the hard drive capacity of its predecessor, illustrates the company’s commitment to growing the console’s role as an HD content download and playback device.