Games? Social Networking? The fact that Murdoch is a part of this venture does not surprise me, because it shows an astounding lack of understanding for why people are buying ebook readers and what the market actually wants in a book reader appliance. Namely, they failed to do prior art to find the millions of PDAs people were using to do exactly what this new format is proposing. Or rather... not doing exactly what this format is proposing, because no one really needs it and it is an energy hog.
The Kindle and other ebook readers (i.e. the Sony one I've owned for the past 3 years) did not become popular because they were a new idea and a new device, they became popular because of a new technology: e-ink. There were book readers before the e-ink displays came around, but very few people used them because they suffered from 2 major drawbacks. The first was the power consumption of their displays meant that you had to plug them in and let them charge on a daily or twice daily basis. People already have to charge their cell phones on a daily basis, but charging one twice a day when you use it a lot is pretty annoying, and a huge amount of power is spent on the display when a cell phone is being used. The second drawback is simply screen real estate and the interface to get to it. PDAs could do exactly what is being proposed, but they didn't because it was hard to use a handheld device in that manner. Sure handheld gaming devices exist and are used... but they have buttons and layouts specifically tailored to using the device as a game. The same goes for cell phones, PDAs, and ebook readers. You can play games on cell phones, but not easily and the power usage sucks up the battery. The new format proposal looks to do exactly the same thing to ebook readers. Congratulations, you just re-invented the N-Gage.
The major "killer app" in the ebook market that no one is mentioning is really quite simple. It isn't a killer display (black and white is fine for books), it isn't a fancy new display (though color would be nice, it would also be mostly useless and a major expense), and it isn't a whiz-bang new DRMed file format. What is missing from the ebook marketplace is simply a universal storefront. Amazon books only work with the kindle. Sony's store only works with their ebook readers. The same for most other ebook stores (with a wider list of readers that can use their store... but a lower percentage of people who actually have those readers). DRM has fractured the marketplace, but selling to the entire install base of ebook readers is really quite simple because all ebook readers out there can read non-DRMed files. It is only the stores that are enforcing DRM. The first store to offer a wide selection of books in non-DRMed format at reasonable prices will suddenly be able to sell to 100% of people interested in ebooks and steal market share from everyone else out there.
I could rant on this subject for days, but the bottom line is: I can get almost any book out there for free from pirates, and I don't have to worry about losing those books when I migrate from my Sony Reader to whatever device I might end up using next (the battery is finally dying). However, I've bought most of my books from the Baen store, because I can get them fast, easily, and with good proofreading. It is easier to read them and find them, and they aren't some OCRed crap with forced line breaks and errors. Publishers have to understand that on the web, they're not competing against the price and convenience other publishers, they're competing against some random pirate scanning in a copy of their book and giving it away for free. If it isn't easy to find a copy of their book that will work on my system for a reasonable price there ($15 for a paperback selling for $8 at the local bookstore?) there is no reason to give them money.
That said, there is one thing I can see some value in for the proposed format: daily deliverables. This is something that isn't done all that well in current generation ebook readers, but it isn't exactly a new idea. There has been some freeware software for the Sony Reader that was able to download and sync online newspapers for you for quite some time now. I first ran into it a couple years back, but didn't actually use the functionality. The only real drawback to it was having to connect it to your computer in order to update, so wireless updating in a smooth manner would be worth some money. So it is valuable, but not nearly as new and unique as they seem to think. For that matter, I saw info on the new "Sony Daily" that is supposed to come out soon, and its entire premise is that it can download content wirelessly. If they can actually deliver content easily and smoothly over a wireless link, I see no real reason to move to a special format for it and the inevitable device specific DRM that tries to lock you in.