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Microsoft Enters the TV Business with Online Pay-TV Subscription Service

Strategic Insights

— 1 min read

Microsoft Corp has held talks with media companies to license TV networks for a new online pay-television subscription service, according to two people familiar with the plans. The software giant's possible push into the television business comes as Google, Apple, and Netflix have vied for a seat at the table of television's future. Microsoft's proposed service could create a "virtual cable operator" delivered over the Internet for a monthly fee or authenticate existing cable subscribers to watch shows with enhanced interactivity.

Key Takeaways:

  • Microsoft has proposed a range of possibilities in talks with media companies, including creating a "virtual cable operator" delivered over the Internet for a monthly fee.
  • The company is also exploring the possibility of creating content silos and selling more individual channels directly, such as HBO or Showtime.
  • Microsoft already has Walt Disney Co's ESPN on the XBox Live online service, offering a glimpse into the company's TV ambitions.
  • Early discussions between Microsoft and media companies have been productive, but a service may not arrive for another 12 months.
  • The pay-television industry has been seeking to allay investor concerns about the rise of online streaming services like Netflix and Hulu, which charge $7.99 per month.
  • Senior media executives welcome new types of competition to the cable and satellite companies, which could drive innovation and pricing.
  • Microsoft has long held ambitions to be a major player in the TV business, having invested in interactive television initiatives including Web TV and MSN TV set-top box software.

Statistics:

  • Microsoft has invested in interactive television initiatives including Web TV and MSN TV set-top box software.
  • Online streaming services like Netflix and Hulu charge $7.99 per month.
  • The pay-television industry has seen a rise in "cord-cutting" as consumers switch to cheaper online services.
  • Microsoft's XBox Live online service already lists Walt Disney Co's ESPN as a content provider.

Sources:

  • Reuters Global Media Summit
  • Microsoft Corp
  • Google Inc
  • Apple Inc
  • Netflix Inc
  • Hulu
  • Walt Disney Co
  • ESPN
  • Netflix Inc (for Netflix Inc quote)

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