Reuters: Microsoft Puts SVOD Service on Hold

12 Jan, 2012 By: Erik Gruenwedel

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Microsoft’s attempt to launch a proprietary subscription video-on-demand service that would take on Netflix reportedly has been shelved due to burgeoning costs for streaming rights, among other issues.

The streaming service would have been incorporated within a planned Microsoft TV platform that also promised live episodic programming and network content to subscribers bundled in pricing options competitive with cable and satellite TV operators. Unique to Microsoft TV would have been that that users could switch channels through voice and/or motion controls.

With its first-mover status in creating a streaming market, Netflix in the process set the bar exceedingly high — paying nearly $2 billion this year alone in license fees for original and exclusive access to network content. 

"They built Microsoft TV, they demoed it for us, they asked for rate cards but then said 'Ooh ah, that's expensive,'" a senior media executive involved in the talks told Reuters, which first reported the story.

Microsoft now appears to be focusing on distributing third-party content via its subscription-based Xbox Live platform. The software giant earlier this week announced a license agreement with News Corp. for programming from Fox TV, IGN and The Wall Street Journal. Indeed, Microsoft ended 2011 with more than 40 major media companies on board Xbox Live.
 

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