Exclusive: Microsoft Web TV subscription plan on hold

Wed Jan 11, 2012 2:44pm EST
 
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By Yinka Adegoke

NEW YORK (Reuters) - Microsoft Corp has put its talks with media companies about an online subscription service for TV shows and movies on hold, according to people familiar with the discussions.

The technology giant had been in intense talks with potential programming partners for over a year and was hoping to roll out the service in the next few months. But it pulled back after deciding that the licensing costs were too high for the business model Microsoft envisaged, according to these people.

"They built Microsoft TV, they demoed it for us, they asked for rate cards but then said 'ooh ah, that's expensive,'" said one senior media executive who had been involved in the talks.

A representative for Microsoft declined to comment.

Early versions of Microsoft's TV service included a range of advanced features such as being able to change channels with voice and motion control.

Similar to Netflix Inc, Microsoft's service also would have allowed users the option of paying a monthly fee for a package of programming from someone other than a local cable or satellite TV company. But unlike Netflix, Microsoft had hoped to offer current shows and live networks on its service, which made it a much higher cost proposition.

Microsoft is still working closely with the TV business to distribute shows over the Web, but rather than playing a role in helping consumers replace their cable TV packages it is focusing on delivering programming via its Xbox gaming system to existing cable subscribers.

At the Consumer Electronics Show this week, for example, Microsoft and News Corp announced a partnership that will allow Fox Broadcast, Fox News, IGN and The Wall Street Journal to offer apps on its Xbox Live service.   Continued...