It was previously mentioned by analysts that a new set of consoles should be rolling out by the end of the decade. However, what exactly does the next generation of consoles entail to step up the quality of gaming and home entertainment?

In the case of Microsoft, a new IP console which will rival Sony's own machine as a gaming console and as a content management system is the answer. As such, Microsoft squashed any further ideas of producing a Blu-ray Xbox 360.

Microsoft was adamant on sticking to the digital distribution model to deliver HD content for its consumers. Aaron Greenberg, group product manager of Xbox 360 was quoted as saying:

Xbox is not currently in talks with Sony or the Blu-ray Association to integrate Blu-ray into the Xbox experience. We're the only console offering digital distribution of entertainment content.

To deliver such an ambitious new project into homes, both Sony and Microsoft met with global telecommunication companies to discuss home gateways and the delivery of IP content. Both companies recognized that IP delivery content will become an important step in the next generation of consoles that they plan to manufacture.

Senior executives from Australian telecommunications company Telstra were convinced that the future of the industry did not simply rely on Blu-ray, but Blu-ray quality content delivered over an IP network. Telstra looked to both Microsoft and Sony to deliver this high quality content through their devices either through downloads or by picking up the content through designated storage kiosks at Telstra mobiles stores.

Telstra plans to become a value-added player in the industry, much like what the built in Blu-ray player did for the PS3 as both a gaming console and an entertainment system. The company is determined to deliver high quality content for all subscribers in its network. This will become particularly useful for countries with relatively slower bandwidth like Australia.