Eager to break into lucrative web-based pay TV, Microsoft has held discussions with television networks and other media companies about developing a system to stream programs via its devices and software, company sources have told Reuters. The new venture would compete with Google TV, Apple TV, and Netflix, which already stream TV shows and movies.
Microsoft's system isn't likely to be available for at least a year, the unnamed sources told Reuters as the international news agency's Global Media Summit began Monday. The summit continues through Thursday with events in New York, London, Paris, Mumbai, India and Taipei City, Taiwan.
Pay TV is a lucrative field because of the ability to generate income both from carrier fees and advertising.
A Microsoft TV service would utilize Xbox Live, which already carries Disney's ESPN sports network, and could also include tablet computers and phones that run on the Windows Phone 7 mobile operating system. "I think it will cut across Microsoft's client products and likely include PCs as well as embedded offerings like Windows 7 Embedded with Media Center as well as Windows Phone 7," said Rob Enderle, principal technology analyst at the Enderle Group.
Microsoft has already laid the groundwork for TV viewing through the Xbox with its fast-selling Kinect motion controller, which allows channel selection and volume control as well as playback control with voice and gestures.
In addition to a direct Microsoft subscription, the Xbox could also be configured to stream content from a provider to which a viewer already subscribes, the Microsoft sources told Reuters.
Microsoft's TV venture could have an edge over rivals, Enderle said, because its "technology is actually vastly more mature. It is their technology that runs AT&T U-Verse, and they have been working on products in this class for over a decade."
U-Verse offers digital TV and DVR, phone and high-speed Internet service through Internet-connected set-top boxes.
If You Build It, Will They Watch?
Enderle said that when Microsoft debuted its "horridly named" Windows 7 Embedded with Media Center at Intel's Developer Forum last September in San Francisco, "it easily outperformed both Google TV and Apple TV, but finding it in market is pretty much impossible. Google TV hasn't been doing that well and Apple TV hasn't seemed to have picked up much of a following, either."
The Xbox may present a great opportunity for Microsoft TV, he added. "Xbox easily outsells both combined, and potentially represents a better value if it can get a content lead as well. Microsoft has been performing much better of late, suggesting they could pull an upset if people will accept a non-cable set-top box solution."
That last question, Enderle said, is up in the air at this stage of the game, which means "all of these folks may be chasing a market that may not really exist."