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Xbox still more about games than shows

Microsoft has long painted the Xbox One as a system that's about more than just video games, saying home entertainment is equally important.

To underline that, a year ago it announced a live-action "Halo"-themed series produced by Steven Spielberg—and has since revealed a fairly extensive lineup.

But the division has undergone changes, and now original video content is being de-emphasized.

"What I wanted to do here [at E3] was make sure that people understood that for me Xbox is first and foremost a gaming console and a gaming brand," said Phil Spencer, who became head of Microsoft's Xbox division earlier this year. "I don't think Xbox One will win the living room on any individual piece of video content. … Priority number one is winning with games."

Phil Spencer, vice president of Microsoft Game Studios at Microsoft Corp.
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Phil Spencer, vice president of Microsoft Game Studios at Microsoft Corp.

While Spencer said while he's excited about some of what he has seen so far, "people aren't going to buy the console to watch video content."

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That's the latest in a series of pivots the company has made since its introduction of the Xbox One a year ago, but unlike some of the other changes, it's not a complete policy reversal. Original programming is still in production for now and will begin rolling out this year. ("Street United," a soccer documentary, releases this week).

Among the other announced offerings are an eight-episode series from the producers of the BBC hit "Broadchurch," a comedy sketch series featuring Sarah Silverman and a stop-motion show involving Seth Green and the creators of "Robot Chicken."

The company has hinted at programs based on the "Gears of War" and "Fable" series. And this holiday a separate Halo "digital feature" overseen by "Blade Runner" director Ridley Scott will be included with "Halo: The Master Chief Collection," a compilation of previous "Halo" games featuring the series' lead character.

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All totaled, 12 original series are in the works, which will supplement Xbox Live between big game releases and hopefully keep restless gamers happy.

Analysts tend to agree with Spencer, though, saying the strategy, while innovative, isn't one that's likely to sell more Xboxes.

"Netflix is making its own content and being successful with it, and that's what Microsoft is trying to do with its system," said Eric Handler, senior equity analyst with MKM Partners. "If that can broaden the appeal of Xbox One, so be it. But at the end of the day, the majority of people buying these consoles are buying them first and foremost for games."

It does, however, let Microsoft hone in on the lucrative original programming market, pitting it against companies like Netflix, Amazon and Hulu, who have all been investing heavily in original content since 2011.

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Spielberg's "Halo" series, of course, is what Microsoft hopes will be its "House of Cards," but Microsoft may be pursuing a different model. Since the "Halo" game franchise is so important to Microsoft's console, the company may not limit the audience for the show to just Xbox owners. Earlier this year, Variety reported the company was in talks with Showtime Networks to premiere the episodes on the cable network before bringing them to Xbox.

That partnership, if it happens, could end up being the new direction that Microsoft takes original video content. It's still somewhat unclear. But one thing Spencer is clear about is that he wants games, not video programming, to clearly lead the way for Xbox One

"When I think about the last year, I think there were problems that people weren't clear whether gaming was still the center about what Xbox was about," he says. "It was, but we weren't as focused on that message. It has to win with gamers first."

—By Chris Morris, special to CNBC

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