Report: Microsoft gives up on subscription TV

Microsoft Corp has put its talks with media companies about an online subscription service for TV shows and movies on hold, according to a report from Reuters.

After intense talks with potential programming partners for over a year, Microsoft pulled back after deciding that the licensing costs were too high for the business model.

“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 on the Reuters report.

However, the company will continue to offer TV shows on its Xbox platform. At this year’s CES, Microsoft announced deals with Fox Broadcast, Fox News, IGN and The Wall Street Journal.

Broadband TV Views. This is not the first time that Microsoft tried to enter the TV market, but decided to give up.

Things looked different last September, when Microsoft CEO Steve Balmer told financial analysts that the new Xbox TV platform would launch this past holiday season. Without going into specific details, Balmer said the service would be similar to that offered by Canal+ in France, Sky in the UK and Foxtel in Australia.

Last June, there were already signs that Microsoft found it difficult to strike deals with broadcasters when they announced a deal to bring YouTube to the Xbox, but failed to sign more deals.

We can now again pose the question – is Microsoft the right company to achieve success in the world of interactive TV? So far, all their projects have failed. Who remembers Web TV? A small US start-up, in which Dutch CE manufacturer Philips was also a minority investor, which aimed to bring the world wide web to the TV set. An attempt to sell the service as MSN TV to (elderly) people without a computer failed.

Then there was Microsoft TV, which would bring full interactivity to cable networks. At least, that was the plan UPC was planning to introduce in the late 90s. They never did – except for another operator in Portugal in 2001. And French company Alcatel tried to sell their early IPTV products bundled with Microsoft TV software. The idea evolved in Multiroom – as used by AT&T’s IPTV service in the US.

Another go at the TV market was the concept of Windows Media Center, which involved having a built-in analogue TV tuner (!) in the PC. By doing so, it tuner the computer into a de facto TV set with PVR. The idea wasn’t so bad, but until now, it hasn’t caught the consumer’s imagination.

Can companies such as Microsoft be successful in the TV market? We are not so sure – especially when we look at the cold reception Google TV is getting from the established forces in the entertainment world. For them, one Apple and iTunes store seems to be enough. No more out-of-left-fielders, if they can help it.