Microsoft in talks for new TV service: sources
(Reuters) - Microsoft Corp (MSFT.O) has held talks with media companies to license TV networks for a new online pay-television subscription service through devices such as its Xbox video game console, two people familiar with the plans told Reuters.
Context & Ripple Effects
Microsoft had already been reported to be discussing ESPN programming for Xbox in January 2010. The reported talks broaden that earlier content ambition from a single sports partner toward licensing TV networks for a subscription offering.
A confirmed Xbox-focused Silverlight hiring effort also indicates Microsoft was building web-application capability for the console, a relevant delivery layer if the reported media negotiations produce a service.
First-order effects
- Microsoft’s reported negotiations put media companies in the role of potential channel licensors while making Xbox a prospective paid video-distribution endpoint.
- Xbox’s value proposition would extend beyond games if Microsoft secures the network rights under discussion; no agreement has been reported.
Second-order effects
- A network-based subscription would require Microsoft to turn isolated programming discussions, such as the reported ESPN talks, into a repeatable rights-and-billing model for Xbox users.
- Media companies considering Xbox distribution would have to weigh a new console-based subscription outlet against the terms of their existing television distribution arrangements, which are not detailed in the report.
Third-order effects
- If Microsoft can convert content licensing into an Xbox subscription business, the console market shifts further toward a service-and-content strategy in which recurring media access helps differentiate hardware.
- The limiting factor becomes rights acquisition rather than console capability: network owners, not Xbox hardware alone, determine how broad a TV offering Microsoft can assemble.
The trend: Game consoles are evolving into service platforms, with video rights becoming a strategic input alongside games and device software.