Microsoft’s SmartGlass Application Could Dominate “Couch Commerce”

Published Tue, Jun 5th, 2012   Justin Fritz, Executive Editor

Right before the Electronic Entertainment Expo (E3) in Los Angeles kicked off yesterday, Nintendo (PINK: NTDOY) officially unveiled its GamePad controller for its upcoming Wii U gaming system.

As longtime Wall Street Daily readers might remember, I wasn’t exactly thrilled with Nintendo’s original announcement about the Wii U at E3 last year.

Now, the Wii U GamePad looks similar to the prototype: a large, flat brick with a screen that can be used to enhance game play. Only, since the original announcement, Nintendo has added more features – including an NFC reader/writer that could add an interesting layer to games in the future. And the GamePad’s screen can also become a fully independent TV remote.

Nintendo’s continuing its demonstration of the Wii U at the E3 conference today, and I’ll send out an update tomorrow.

What’s interesting about Nintendo’s announcement on Sunday, however, is that it looks like it was meant to hog a bit of the spotlight from Microsoft (Nasdaq: MSFT).

As TechCrunch’s Matt Burns puts it, “The last few years Microsoft has generally kicked off the festivities with the first major press conference of the show… [But] Nintendo announced [Sunday's] online press conference, effectively stealing a bit of Microsoft’s E3 swagger.”

I’m not sure Microsoft is too worried, however. Since the company announced a pretty killer “second screen” technology of its own…

SmartGlass Revolutionizes Gaming and TV

It’s called SmartGlass. And like Nintendo’s new controller, it adds a new screen to enhance your living room entertainment experience. But it doesn’t require an extra controller to do it. Instead, it’s an application that relies on computers, tablets, or smartphones.

And surprisingly, it’s not just for phones running the Windows Phone operating system. iPhones and Android devices are kept in the loop, too.

Like the Wii U GamePad, SmartGlass can be used as a simple remote control for TV. It also taps into another layer in videogames that run on Microsoft’s Xbox 360 console. It’s up to the game developers to decide how that’s going to happen. One example given at the conference was using your tablet to map out a new play in a football game.

Sounds great, but what really has me tuned in is that SmartGlass can enhance TV shows viewed on Xbox consoles, as well. The company demonstrated, for instance, how watching “Game of Thrones” can pull up a map on your iPad of where the characters are located during the action.

Essentially, this feature takes TV viewing to an entirely new level.

After all, while a map of a fantasy world might not interest you, how many times have you watched a television show and spotted an actor you couldn’t quite place? At which time you’d whip out your iPhone and check it on IMDB. You’re not alone, since eBay (Nasdaq: EBAY) reported back in November that 86% of TV viewers are keeping their eyes peeled on a mobile device while catching up on TV at the same time. SmartGlass just makes it easier to find the information you’re looking for.

This isn’t just about keeping users hooked to Xbox 360 video streaming, however…

Advertisers Will Flock to SmartGlass

Something else that eBay noticed in November is that more people are using mobile devices to shop online. In fact, the company saw a six-fold increase in users purchasing goods on mobile devices on Black Friday in 2011 than in 2010.

Not to mention,“64% of smartphone owners are now using their mobile devices to shop online, a number that has quadrupled since June 2010,” according to MobileMarketingWatch.com.

eBay is already trying to take advantage of this “couch commerce” trend with its Watch With eBay app, which can pull up relevant eBay listings based on a television show that you’re currently watching. So users who want to know where they can get that cool suit on “Mad Men” might be able to find a similar style in an eBay auction.

With SmartGlass, Microsoft has a chance to one-up eBay, however, since it can potentially provide links to any online retailer that’s relevant to a program. That way, anyone from carmakers to dress designers can have Microsoft feature an ad for their merchandise seen on a particular show.

A privilege that Microsoft, of course, would charge top dollar for. Given that, SmartGlass promises to open up a potentially massive new revenue stream for Microsoft in the coming months.

Good investing,

Justin Fritz