Microsoft Loses the Online Content Fight

I shouldn’t actually call it a fight because that implies
one actually gave effort, but CES 2009 has shown that Microsoft is effectively
out of the race to provide a platform for streaming and downloadable content
via the PC.  I say via the PC because the Xbox is still alive and actually
putting up somewhat of a fight.

With every major display company now pushing integrated
online content embedded or easily attachable to their displays the PC is now becoming
irrelevant.  No longer is the concept PC-to-TV, it is Web-to-TV and
Microsoft fails to offer compelling products that work under this

Media Center had strong potential to rule the online
world.  In 2002 when Microsoft introduced Media Center the Online
Spotlight provided a mechanism for content providers to offer 10-foot versions
of their streaming services.  As time went on however Microsoft had a
difficult time keeping content providers interested with big names like MTV
Network pulling content for reasons unknown to anyone but Microsoft

In late 2007 Microsoft offered up their Internet
TV plug-in
which scrapped content from their MSN properties.  Then in
early 2008 Internet TV got an upgrade that introduced
interactive ads
, a feature that I thought would give Microsoft a leg up in
streaming   Alas, Microsoft has failed to secure any additional web
content.  Even Netflix, which is on the Xbox 360 didn’t get ported to Media
Center (while unofficial plug-ins fill the gap for users).  Windows 7 hits
hard on integration
of broadcast and broadband
, but that only goes as far as the content you
have to offer.

My advice to Microsoft, buy boxee
and integrate it into Media Center, Xbox 360, and Zune.  Unless you have
some big partnerships in the works (CES would have been a good place to unveil
those), your platform is effectively dead for online content delivery (broadcast
isn’t looking that hot either

13 thoughts on “Microsoft Loses the Online Content Fight

  1. I think what we are seeing is a fracturing of the online content delivery system. Everybody and their brother will deliver online content to their devices. I just wish Microsoft offered HD movie downloading to Media Center like the Xbox.

    I personally like Media Center to access my OWN content. Even with netflix, I very rarely watch online content. I want HD and online content on a 50″ TV is just not compelling, even when it is claimed to be “HD.”

    I have just accepted MC is just not cutting edge any more. There is not one feature that is “killer” besides a nice interface. I personally think MS should just kill MC, even though I like the product. With the snails pace of development, maybe they have.

  2. Meh. It just says that online content hasn’t matured yet.

    Microsoft can now expend more resources building software products that people want to buy (i.e. broader TV tuner support, Blu-ray support, etc.).

    Remember, Microsoft is a _software_ company, NOT a content company. As such, they will provide _software_ products for markets that show interest in their products.

    For the most part, Microsoft has positioned Media Center be a general purpose media presentation platform. Although, Microsoft seems to “lose” their vision on this from time to time, and it seems the current crop of Media Center product managers are showing their incompetence.

  3. Consider every major display mfg now have online streaming built into their displays I wouldn’t say that it hasn’t matured.  I’d say that it has, enough so that the competition is already taking the market.  When your new display ships with the technology you no longer have a need to spend more on a Media Center or Extender.

    You are right about Microsoft not being a content company, but you do have to realize and think about the fact that Microsoft success in the market is 100% dependent on those third parties.  With the third parties going elsewhere, Microsoft as a software company is going to be at a huge lose.  Their choice is going to be simple, build a platform that demands respect (not looking good there), or get out of the game.

  4. After browsing CES news for the past few days, I was thinking the exact same thing…MCE is officially behind in the game. It doesn’t have to be that way. Think about how often someone buys a big screen TV w/ a 4-digit price tag…once every 5-10 years or so, if that? Any hardware included in that TV will have a similar turnover rate. I also don’t really care for a set top box that does one thing, like most of these STBs do. A full-on HTPC is still the best route…assuming there is software to take advantage of all these new developements. MS in in a position to provide a convergence of all of these different systems. Digital TV, netflix, amazon unbox, 2-way TV, hulu, mtvmusic….you name it. I’ve spent alot of time and money on my HTPC and it’s EXTREMELY frustrating that MS is letting MCE die(intentionally or not). Hopefully Boxee will send me my alpha invite very soon!

  5. Features have been built into Televisions in the past… consumers have shown that they prefer the set top box approach. Whether MCE comes back out on top with Win7 is anyone’s guess, but I don’t believe the world is going to integrated Television.

  6. The main difference here is that in the past features have been built into displays in watered down form while people are already used to using STBs in a much richer form.

    STBs for web content are about at the same spot that displays with web content are. They are both based off the same processors, basically provide the same experience, etc.

    Unlike something like CableCARD, which provided built-in functionality with 1/3 of the functionality of a STB, web and Internet video will be just as rich on both platforms.

  7. This a complex issue because it just doesn’t involve technology there is a psychological component involved. The TV has been traditionally a passive device and to make the TV interactive like a PC is for many not that interesting. I also agree with other comments that the content isn’t there yet and don’t forget that the broadband infrastructure is also a problem.

    Another problem for Microsoft is that people don’t want a PC running their TV. The boot times have to be quick because when people turn on their TV the picture is there within seconds, people don’t want to boot their TV sets like a computer.

  8. I think 10 million active users of Windows Media Center is a pretty good start. 🙂 Chris, as usual, you’ve called the fight in the first 10 seconds of the first round, when nobody has actually even taken a swing yet. It takes *years* to build these sort of experiences, and I’m not sure you appreciate the full complexity of broadcast + broadband integration from both a design, technical and business standpoint. Furthermore, I’d characterize our work to date (Online Spotlight / Online Media) as ‘exploratory’ or ‘experimental’ in nature. In the time we’ve had Online Spotlight, Online Media (or Extras in Windows 7 we’ve seen many ‘competitors’ announce and demonstrate things at CES — and then vanish, sometimes even before the next CES.

    I wouldn’t count us out just yet. 😉

    And as always, you can give me a ring at 425-707-7818 or send an email to if you’d like to discuss this or any other topic to make sure your readers get accurate and informed information.

  9. I think a major cause of this problem for MC in the past – has been it’s lack of support non MS proprietry codecs. Specifically – WMV format (where VC1 isnt supported accross extenders) – is really the only decent option for streaming to MC and extenders (without the end users having to install a lot of complex software/codecs).

    Content providers simply don’t want the added expense/infrastructure headache of producing WMV content for such a small reward. (and have heard this first hand on a number of occasions). Currently they can just encode to flash (and also h264) – and hit a very large percentage of the target audience without worrying about Media Center at all. Additionally – they can enforce branding, stickiness and content protection etc a lot more easily with flash (and have less worry about exposing raw video streams to the public).

    The same issue has also severely impacted the uptake of Silverlight 1+2 (which is currently locked into WMV only support).

    (Probably) The reason the Internet TV channels are only providing scraped MSN video content – is they are one of the very small handfull of content providers actually encoding to WMV on the backend… Most of the providers that initially were supporting WMV have now gone to flash only.

    I think the ‘out of the box’ h264 support in Windows 7 (which also means XBox360 MC Extender) – and upcoming support for this in Silverlight 3 – is going to substantially improve things for Media Center + Silverlight users.

    Youtube content for example is already available in H264 (and is how it’s streamed to the iphone) – so there’s a much smaller amount of effort/investment for them to make a Media Center client (and they don’t have to do any additional encoding).

    Additionally the bug fixes to the actual streaming playback in 7MC will also provide a much better experience (ie. display of buffering progress %, not locking up addins etc).

    It will be interesting to see who comes on board for Windows 7 (and who is actually permitted by MS to be included in that exclusive club of discoverable content they call ‘extras’) – anything will be an improvement!

    my 2 cents…


  10. I hear what you’re saying, Chris. I got excited when an early review of Win7 Beta revealed “online content” in the channel guide. The article implied we’d be streaming content from the big networks.

    When I got the beta, however, I found it’s just an easier way to find the content you get from Online Media. Bummer.

    I see Charlie’s point of calling his work “explorartory” or “experimental.” I think of Media Center as their concept car and assume features will find their way into products and services more J6P friendly.

  11. Well, Microsoft isn’t that much into content – but they’re into supplying software. Syndication – supplying provisioned content, is the real kill. Legacy publishers are going away – replaced by a publishing service – i.e in the old days a web server, layout etc. No more primary role as news paper publishers, music publisher etc. Right now, previous publisher had to revent themselves fighting newcomers repeating the web server distributing content for free not caring about rebranding and ust focusing on earning from ads. But its survival – not innovation into a new role and a new kind of business getting them out of competion with an automatic machine. You control publishing in a nature where you can observe stuff anywhere. The are no roads at where content flows … you just observe … and it manifests at you’re location. Like with quantum physics. Think RSS and soon syndication e-commerce catalogs. Even domain names will become less. Its already like this and even more so thinking cyberphysical networks (i.e. robots and humans collaborating). Computer Science is comming up for real where the computations live in between the interactions of sensors, like the producer-transformer-consumer pattern.

    So how do you know this a do actual product manage all the same. Well, product manage is about current market openings – what will people pay for right now — what can they understand … and R&D is about what probable market openings will appear in say 5 years?

    If MS is laying of media center it just means the brand – thats is the product is going away.
    What then … ? Well, bittorrent is may be the best current example of the future. Video is nowhere – like everywhere. When you try to observe it – it appears where you’re at. Currently “to observe” you need to observe the torrent … then you still have to wait a little for it to appear like the old slow webservers … or another example could be another try like a search for something then you can observe it like a news story anywhere. Theres just no one place. You can not have channels or content roads is this kind of globalized nature – like you cannot control where nuclears can appear in the universe.

    So there no content fight. Content has been disppearing into the sky since 1990.

    So what will people need?

    Guess it – and do well.

    For the current opening, ms is betting consumers have stored 50% of their data outside the my documents folder and reintroduced search folder technology behind a virtual library concept in Windows 7. So what is outside the consumers my documents folder. Too many hyperlinks, word documents, excel, research like webpages in the numbers that you need to buy at least 1 TB harddrive … and it must be an external hd so you can share you authored documents with your family and friends. Ehhh.

    For now thats why MCE is getting popular … as well as wireless desktops on bluetooth … and keep Windows the popular guy in the home.
    The same thing goes on with XBox like the XBMC. And so on.

    If you want you can easily hook up Media Center to free tv channels on the net. It takes one url to the service and a playlist.

    Its just a current opening based on current needs … but probably not the future … unless consumers should also get data liftecycle management solutions for their stuff while worring about how to online or easily backup all those collections or memories.

    How stuff works tomorrow … I guess MS is better there than anyone betting on a TV plugged into a service. This is not supporting the behaviour developing based on the digital nature of the net.

    Hows the content business thinking … I think the are on to research new business models utilizing this kind of dynamics — want, service, pay … – not the newspaper, the tv, but right here, right now. Just appear at my place – I don’t come to your channel, paper website – media or whatever. Quantums mechanics can be like that. Materialize Spoc. When content go Star Trek

  12. I do agree that Microsoft should support boxee – or rather the core xbmc. May be not buy it – since its out there core business. If they could push their software through XBMC it would great. IBM push a lot of open source software through the apache foundation. And it would be nice to see XBMC grow into the new media center. I am currently going with Windows Media Center – but last year very close to shifting into XBMC and collaborate with that project. Now I will try out the new media center and the fairly new release of XBMC – and then decide whether I should go XBMC. Just the looks of XBMC is great.

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