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.
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