While the PlayStation 3, Xbox 360 and Wii are 
still game machines first and foremost, they’re increasingly being used for other forms of entertainment.
A new survey by Nielsen finds that non-gaming functionality is on the rise among console owners – and among PS3 owners, it even surpasses the time spent playing games.
The Mouse House
is aligning itself tightly with Netflix.
The two companies today announced a deal that will significantly boost the amount of television content Netflix is able to stream from ABC, The Disney Channel and ABC Family.
While gamers have been able to rent 
new titles by mail for years, the options have been limited when it came to streaming services.
That’s changing now, as OnLive looks to leverage cloud computing and a Netflix-proven business model to offer instant streaming of new hit titles to players. Last month, the company released a set-top box, letting customers buy recent and catalog releases on an a la carte basis; this week it released an iPad app; and starting in January, it will offer a pair of new payment options.
Those pundits who have been 
focusing on the threat OnLive, a video game streaming service, poses to the traditional video game industry might want to expand their focus a little.
The company now says it plans to expand into subscription video streaming in 2011. And Amazon could be right behind it.
[As Sony announces a tie-up with Vudu for HD 
movie streaming, Gamasutra editor-at-large Chris Morris looks at how the PlayStation 3 creator has started to gain ground on Microsoft’s array of on-console media content — the next big battlefield for game consoles.]
Long before Kinect, Microsoft had its own way of courting the non-gamer – offer functionality on the Xbox 360 that was unique enough to lure in people who weren’t interested in the latest Haloinstallment. And it was a pretty effective method.
With Netflix integration leading the charge in 2008, the Xbox 360 finally fulfilled the dream of the console as a Trojan horse of the living room. It gave the company a huge competitive advantage for a while, but recently that advantage has been slipping away. Sony, in particular, has gained a lot of ground in that battle and is threatening to overshadow Microsoft’s achievements.
Could the set-top box kill cable?
It’s hard to turn the corner these days without someone thrusting a new gadget for your television at you. Apple and Google are among the more familiar names exploring the space, but they’re just the tip of the iceberg. The arena also includes aspirants such as Roku, Boxee, Seagate, Asus and Western Digital. And the three major vidgame consoles are already delivering content.
Microsoft’s anticipated update of 
the Xbox 360 dashboard has gone live, bringing new features to sports and music fans.
The system update, which is mandatory for all users who wish to connect to Xbox Live, brings over 3,500 live and on-demand sporting events per year to the system, courtesy of ESPN3. That partnership will also include scoreboards, voice chat and the ability to “predict the winner” of games via polls.
Read more at Variety’s Technotainment blog
Up until now, PlayStation 3 owners who wanted to stream a film through Netflix’s “Watch Instantly” feature had to manually insert a disc into their devices. As of Oct. 18, they won’t have to bother anymore.
Next week, a system update will make instant Netflix streaming a native application on the game console – putting it in parity with the Xbox 360, which had exclusivity on dashboard streaming until now.
The growing threat of Web video distribution 
is one the cable industry needs to pay closer attention to, according to the CEO of Verizon. Ivan Seidenberg, at a Goldman media conference in NY, told attendees he doesn’t expect future generations of customers to have any interest in buying cable bundles.
“Young people are pretty smart. They’re not going to pay for something they don’t need to,” he said. “Over the top is going to be a pretty big issue for cable.”
Apple is wading into the stream. The company’s 
much-anticipated overhaul of its Apple TV service eschews the download-to-own model in favor of an HD Web streaming rental biz.
Apple’s plan to make movies available day and date with DVD for a $4.99 rental is in keeping with the film biz’s piracy-combatting push to make titles available for easy legal downloads through a host of platforms, from Apple’s iTunes to Netflix (which Apple TV will support); Amazon, Hulu and Blockbuster; the major videogame consoles from Microsoft, Sony and Nintendo; and, soon, YouTube.
Chris Morris: Journalist 