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November 29, 2010
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Microsoft is in talks with several entertainment studios with an eye to licensing content for a new subscription television service that would be streamed though the Xbox 360 and other devices, according to a published report.
News agency Reuters cited two anonymous sources Monday in reporting that the talks were underway. Reuters' sources said it could be up to a year before any such deal comes to fruition, however. Microsoft has not confirmed the report.
Microsoft's efforts in Internet-based television have been less than successful to date. The company launched Ultimate TV in 2000 under a plan to compete with Tivo in the DVR market, but pulled the product just three years later amid faltering demand and licensing issues with partner DirecTV.
If the software maker again enters the arena, it would face an even more competitive battlefield that's recently been joined by other tech heavyweights, including Apple and Google.
But a media exec told Reuters that Microsoft's presence would be a boon for studios, which earn revenue by licensing their content to networks and cable operators, and from advertising.
"We think the more competition the better, we will price and package it in such a way that we still make the dual revenue stream," the exec said. "We could probably charge more for interactive advertising," the exec said.
An effort by Microsoft to license content directly from networks and studios for distribution on its own network could also complicate its arrangements with existing partners. The company, for instance, currently offers Netflix's online movie rental service through Xbox Live. Netflix could possibly view a Microsoft TV service as a competitive offering.
Microsoft shares were up .29%, to $25.32, in late afternoon trading.
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