Since the mid-90s when they launched a 24-hour cable news network and purchased WebTV, Microsoft has been trying to figure out how to marry television with the Internet (see our full history from July). Now, a decade later, they may finally be gaining some traction.
BusinessWeek reports this morning that though only about 500,000 homes get TV service over the Internet from phone companies using Microsoft software, the company’s IPTV efforts appear to be gathering significant steam. AT&T’s U-Verse IPTV service has grown from 51,000 to 126,000 customers over the last quarter and should be available to 8 million homes by year’s end. Swisscom has signed up 50,000 customers for its Microsoft-powered service (about 1.6% of the Swiss TV market). British Telecom, meanwhile, has designs to sign up 2-3 million IPTV customers within the next 5 years, on the back of Microsoft solutions.
Gartner predicts that the number of IPTV customers will balloon to 50 million by 2010. Microsoft, via partnerships and the coming addition of its Mediaroom IPTV software to the Xbox — which has 12 million users — has positioned itself in a good place to own a significant chunk of that market.
Beyond infrastructure issues associated with delivering HD-quality television over the Internet, Microsoft also faces the challenge of offering features that make its IPTV service stand out from traditional digital terrestrial services people already subscribe to. Making TV more interactive is an oft-tried but rarely successful route to that end. “[The industry] has tried and failed in a number of ways to figure out what interactive TV means,” Enrique Rodriguez, corporate vice-president for Microsoft TV told BusinessWeek.
Microsoft has smartly decided to put the task of developing value added features in the hands of outside developers. As we noted in June when Microsoft rebranded its IPTV software to Mediaroom, the company’s platform encourages developers to build new products and services on top of it. As Steve O’Hear wrote then, “It’s quite possible that software could be added that makes any set-top-box/service based on the platform compete with additional devices and markets such as casual gaming, or music and film download services, as well as open up Mediaroom to partner with existing players in those markets.” BusinessWeek reports that Microsoft is making strides in signing up developers to create applications for the platform.
