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Microsoft: TV must avoid "iTunes moment"

updated 07:50 am EDT, Mon August 31, 2009

MS on TV and iTunes Moment

The TV industry needs to find a convincing online strategy or else risk handing the market over to Apple, Microsoft's UK managing director of consumer business Ashley Highfield warned this weekend. Speaking at an international TV industry festival in Edinburgh, the executive warned that TV could "face its iTunes moment" in two to three years and hand over control of online video to Apple. Without a quick shift in emphasis to TV on the web instead of traditional service, customers are predicted to flock to paid download services and bypass regular providers altogether.

Solving the problem will likely involve pushing targeted ads, bought through an auction-based system. Although it wouldn't fit the conventional TV model of buying ads based on the overall likely audience, it would boost the worth of ads to where advertisers would have more incentive to pay for TV shows online than on old, declining services like cable or satellite.

These changes should take about two to three years themselves, according to Highfield.

The warning is a reference to Apple's seeming control of the digital music business. In 2003, Apple took advantage of music labels desperate to provide a viable alternative to online piracy and obtained terms that were favorable to its own iPod sales, offering songs at a fixed, relatively low 99 cents per track. While the move jumpstarted the digital music market and gave portable media players real acceptance, it led to Apple controlling 69 percent of US digital music and Universal Music Group chief Doug Morris infamously describing his label as being in "golden handcuffs" as it's often beholden to Apple for success.

Highfield's statement is also an unusual concession of the digital video market for Microsoft, as it makes no mention of the company's own TV efforts. The company offers TV shows both through the Xbox Video Marketplace as well as the Zune Marketplace in the US. The two are expected to integrate soon, but neither have gained large traction compared to iTunes or to alternative business models like Netflix.

 
Previous Comments

All Ready There

08/31, 08:43am reply

Put all old DVDs on server disk.

Use Apple TV to rent new ones.

Rental cheaper than all the ripping.

Apple model is right . Music is played over and over while movies or seldom played.

We have quit Blockbuster and Netflix.

There is to much media. Keeping it simple with Apple TV has capture our family.

We only wish that the rentals were three days to get use through hectic weekends.

starwarrior

Fresh-Faced Recruit

Joined: Mar 2006

+15

Mr. Pot, meet Mr. Kettle

08/31, 08:44am (1 reply) reply

Microsoft... warning people about the dangers of monopolies... ummm

joecab

Fresh-Faced Recruit

Joined: Apr 2004

+23

Translation of

08/31, 09:25am (1 reply) reply

Microsoft FUD speak =

We want to dominate you like we do 90% of the desktop computer market. We don't want you to pay the "Apple tax" of paying less for programs than what we want to gouge you for...

philomath777

Fresh-Faced Recruit

Joined: Mar 2004

+20

this

08/31, 10:05am reply

from the company that did everything it could to try and own the web, destroy every competitor to the desktop, bundle it's way to dominance... geesh, these people are unbelievable.

nat

Junior Member

Joined: Mar 2002

+18

What they really mean...

08/31, 10:40am reply

We want you to run from Apple's dominance in media to us even though we have no idea what we are doing and no compelling platform to deliver it on. We have fallen out of the race and want to get our foot in the door. Please, please, please give poor old MS a bone. What have we ever done to you? Really?

BTBlomberg

Forum Regular

Joined: Sep 2005

+12

LOL

08/31, 10:52am reply

These guys wants to own everything. It's not enough to own a monopoly (95%) of the computing market, they want to sell you underwear and tampons in the future.

slapppy

Fresh-Faced Recruit

Joined: Mar 2008

+10

duh

08/31, 10:53am reply

Does MS really think the studios haven't already figured this out on their own?

testudo

Fresh-Faced Recruit

Joined: Aug 2001

+10

This is too rich...

08/31, 11:44am reply

MS as Cassandra. Did anyone remind them that they got in trouble for an anticompetitive monopoly?

jpellino

Fresh-Faced Recruit

Joined: Oct 1999

+6

Avoid Apple's

08/31, 12:31pm reply

golden handcuffs... you really want to wear Microsoft golden handcuffs instead!!!

climacs

Fresh-Faced Recruit

Joined: Sep 2001

+4

Bad Advice

08/31, 02:20pm reply

The advice MS is dishing out -- find an alternative to Apple now, before they take control of your business model -- is exactly what the music labels tried years ago. They looked for any alternative they could find, and when those alternatives failed, they were in an even worse bargaining position than when they started.

An online ad-supported model is notoriously hard to sustain, while Apple's model of users actually paying for the content (imagine that) is a proven success. Putting your content up on Hulu may seem like a good way of hedging, but sooner or later it comes out that you're losing a poopload of money by doing that.

jamiec

Fresh-Faced Recruit

Joined: Aug 2006

+4

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