Microsoft Corp. is unveiling the next generation of its Microsoft TV product — Microsoft TV Foundation Edition — that's built around a core interactive program guide that doubles as a gateway to sell expanded cable services like VOD as well as merchandise.
Microsoft executives are calling the guide a digital-television software solution. And in a visit to Microsoft TV's headquarters here to preview the product, company executives made clear Microsoft's desire to build products cable operators will use in the here-and-now.
Throwback approach
"We have to invest in incubating new scenarios and applications that matter to MSOs and applications that matter to consumers," said Moshe Lichtman, vice president of Microsoft TV. "We're trying to be a good partner."
In a sense, the new software is a throwback for Microsoft TV, a division that consistently pushed the envelope in developing new services that found little audience among U.S. cable operators.
In the briefing Microsoft gave to Multichannel News, there was no talk about "middleware" or "interactive television."
Instead, Microsoft showcased a TV-centric first-screen, graphically rich digital cable portal that included traditional guide features, navigational systems to on-demand features and plenty of advertising and merchandising opportunities operators can use on today's base of embedded digital set-tops.
"The MSO is our number one customer," Lichtman said. "What matters to them is video. There are 30 million thin client boxes out there and DBS has some pretty aggressive promotions. The Microsoft TV Foundation Edition goes beyond an IPG to include VOD, service upsell and merchandising. It's a great value to the customer, with a focus on VOD, choice and control."
Comcast impact
In fact, in Microsoft's pitch to operators, the giant software company is acting like a first-time vendor, pointing out that if an operator sells one more VOD movie per month per digital subscriber, or increases SVOD take rates by 20%, the foundation software package will pay for itself.
There are signs that Microsoft's new direction has been influenced by Comcast Corp., now the country's largest MSO.
Microsoft chairman Bill Gates famously invested in Comcast years ago, after a persuasive pitch on cable's behalf by Brian Roberts. That hasn't translated into many inroads on the product-distribution front.
But at NCTA this week, Gates is joining Roberts on the opening panel, in Gates's first NCTA appearance in several years. He's expected to mention the new Foundation Edition product.
Hint from Addis?
Lichtman said Microsoft has been spending a lot of time in Motorola's Acadia labs doing integration work. Motorola is the chief set-top vendor for Comcast. Andy Addis, Comcast's vice president of video marketing, told analysts on May 16 that Comcast planned to have a "dynamic and experiential guide" in the next 12 to 18 months.
He didn't mention names, and TV Guide also is working on an advanced guide, but Microsoft TV's Foundation Edition could be viewed as "experiential."
The portal can be customized by the MSOs, but in the version Microsoft is showing at the National Show, seven segments — news, weather, sports, entertainment, kids, lifestyles and games — are listed after the opening linear guide screens.
A core focus is on VOD. "VOD is available throughout the experience, not just via the IPG," Lichtman said.
Banners that link to hit movies or SVOD services dot the pages. Those banners would take a subscriber directly to the hit-movie section of HBO On Demand, for instance.
The design is meant to drive traffic and usage of VOD, similar to how groceries display featured products front and center.
Setting sales
Microsoft envisions operators using the guide to sell premium networks, SVOD, VOD and digital music. Slots for banner ads and merchandise dot the screens. Microsoft gives the example where a Walt Disney Co. might sponsor and advertise on a children's programming or VOD section, or BMW might run its successful online experiential ads on a VOD service.
Lichtman emphasizes that the digital software platform works on today's Motorola 1700 and 2000 set-tops, in addition to higher-level set-tops. "You'd be amazed what can be done on a DCT 2000" in terms of graphics, he said.
The emphasis on the here-and-now could give Microsoft the chance to break through the U.S. market. It has a Microsoft TV deal with Charter Communications Inc. for advanced boxes, but that deal seems largely dormant. It recently signed a deal with two small Oregon cable operators, Willamette Broadband LLC and Uvision LLC, but a large-scale MSO deal in the U.S. has remained elusive.
TV: 'The ultimate'
That checkered history didn't stop Lichtman from taking the Microsoft TV job over a year ago. Lichtman spent six years in the Windows division and another six in the media and entertainment division, so he knew what he was getting into. So why take the job? "I'm very passionate about consumers and TV is the ultimate consumer device," he said. "A lot can be done to improve entertainment."
At the same time, he said, "I knew I was stepping into a business that was really challenging. The end goal is to have a better TV experience out there. We spent three months talking to customers and we launched a new vision based on that, with scalable products from thin clients to premium-level set-tops." Microsoft also hired some cable- industry veterans from Tellabs, Ceon and iVast to help with its sales efforts.
