[opendtv] News: Comcast Will Use Microsoft System For Digital TV
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 20 May 2004 21:27:39 -0400
Comcast Will Use Microsoft System For Digital TV
By PETER GRANT and ROBERT GUTH
Staff Reporters of THE WALL STREET JOURNAL
May 21, 2004
NEW YORK -- Microsoft Corp., which has been=20
struggling to break into the television business=20
for over a decade, took a big step in that=20
direction by announcing a deal to license its=20
software to Comcast Corp., the country's largest=20
cable-TV company.
Comcast said it would deploy software developed=20
by Microsoft TV in up to five million of its=20
digital set-top boxes over the next 21=8E2 years.
The software, known as Foundation Edition, serves=20
as a platform for the program guide as well as=20
the new features being added to digital cable,=20
like movies on demand and interactive games.
Terms of the licensing agreement weren't released.
Microsoft has signed more than 10 other such=20
deals for its cable software over the past year.=20
But the one with Comcast, which has over 21=20
million subscribers, is by far the largest with a=20
U.S. cable operator. Even so, Microsoft is still=20
a minor player in the business and faces tough=20
competition, especially from Gemstar-TV Guide=20
International Inc., which dominates the program=20
guide business.
"This is a good step in the right direction, but=20
obviously we have a ways to go," said Moshe=20
Lichtman, vice president of Microsoft TV.
The deal comes at a time when an increasing=20
number of cable subscribers are shelling out an=20
additional $10 a month or so to get digital=20
service, which requires a set-top box. Demand for=20
digital cable had been lackluster until recently=20
because the service primarily offered additional=20
channels and a better quality picture. But it's=20
getting more popular, now that cable operators=20
are offering new features, setting off a scramble=20
among software developers to produce them.
=46oundation Edition was developed to work on the=20
millions of set-top boxes already deployed. While=20
the boxes have less processing ability than was=20
originally anticipated, the Microsoft software=20
gives cable-TV operators the ability to add=20
richer graphics, interactive games and other=20
features -- including ads -- to existing program=20
guides.
Comcast is particularly interested in those=20
abilities because it has over the past year been=20
making a huge push to promote on-demand movies=20
and other programming that digital cable=20
subscribers can watch at any time. Foundation=20
Edition gives Comcast the ability to promote the=20
latest on-demand features on the program guide.
Comcast executives said the Microsoft software=20
will make it easier to navigate through the=20
myriad digital-TV offerings. "The vision is to=20
allow consumers to access the television they=20
want to watch when they want to watch it," said=20
Steve Burke, president of Comcast's cable=20
division.
About 27.1 million of the country's 73.2 million=20
cable households are expected to subscribe to=20
digital cable by the end of this year, according=20
to the Yankee Group, a Boston-based consulting=20
firm. Comcast had 7.8 million digital subscribers=20
as of March 31.
In recent years, the slowdown in technology=20
spending by businesses has cut into Microsoft's=20
growth, forcing the company to refocus most of=20
its energy on shoring up its core business of=20
personal-computer software. Still, Microsoft=20
retains big plans for expanding more deeply into=20
consumer software to position the personal=20
computer as a central hub for home entertainment.
Microsoft has been trying to become a presence in=20
cable since the early 1990s, spending hundreds of=20
millions of dollars to develop cable software.=20
And in the late 1990s, Microsoft made several=20
high-profile investments into cable operators,=20
including Comcast.
Microsoft, along with others, initially misread=20
the cable market by developing set-top box=20
software that had too many features and was too=20
expensive for most cable operators. Cable=20
operators also were wary about letting the=20
software giant get too much control over critical=20
systems.
"The typical story for Microsoft is that they try=20
it and by version three they get it right," says=20
Josh Bernoff, principal analyst at Forrester=20
Research. "This took a lot longer than three."
Comcast committed itself to helping Microsoft=20
break into the cable-software business when it=20
acquired AT&T Broadband in late 2002. At that=20
time, Microsoft agreed to convert $5 billion in=20
AT&T debt into Comcast equity. In exchange,=20
Comcast agreed to launch Microsoft software in=20
25% of its systems, if certain conditions were=20
met.
Comcast also is hedging its bets. In February,=20
the operator announced a joint venture with=20
Gemstar-TV Guide to develop a new program guide.
Write to Peter Grant at peter.grant@xxxxxxx and Robert Guth at rob.guth@wsj.=
com
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts:
- » [opendtv] News: Comcast Will Use Microsoft System For Digital TV