The MSM responds to Microsoft's HD announcement

by Christopher Grant { Nov 8th 2006 at 11:00PM }

The mainstream media (or MSM for those of you down with the Web 2.0 lingo) doesn't cover every video game story out there, so when they dom, we always perk up and take notice. Following Microsoft's big HDTV announcement Monday night, several major mainstream outlets covered the news. Let's see what they had to say:

Time Magazine considers the downloadable space as a whole, where "many companies including Microsoft competitors Apple, Amazon.com and Google are getting into the video distribution business. Microsoft's ace is that the Xbox 360 is already connected to the TV, a hurdle others try to overcome by marketing multimedia set-top boxes or creating unwieldy hardware partnerships."
The New York Times compares Apple and Microsoft's similar, but oh so different, strategies, writing, "Microsoft will go into the video business with a different business model. Apple, most analysts believe, does not make much money selling iTunes content, but makes up for it by selling more iPods, which are extremely profitable. Microsoft, which analysts say loses money on each Xbox 360 it sells, expects to make up for that shortfall by selling games -- and now video.
Reuters looks to the more obvious competitor. "Sony Corp., which ships its PlayStation 3 on November 17 with its own digital-distribution network, PlayStation Network, also will look to movies, TV content and music down the line but has not yet announced specific deals. Games will be the first focal point, as they have been for Microsoft during the past year with its Xbox Arcade service."

So, Microsoft got there first (or, rather, they will when the service launches on November 22nd): A high-definition video download service connected to a set-top box already installed in millions of living rooms (and counting). But there's still more questions than answers in this shady, poorly-lit basement cockfight for living room supremacy. Like: what about the borderline impossibility of future cooperation with Sony Pictures? That would make it hard to be a comprehensive service. What about iTV?

Tags: HD, MSM, New York Times, NewYorkTimes, NYTimes, Reuters, Time, XBLM, Xbox Live, XboxLive

Reader Comments (Page 1 of 1)

Swiper @ Nov 8th 2006 11:56PM

Let's think this through.

Suppose I'm Paramount, one of Sony's biggest competitors in the movie biz. Why would I want to release movies on their service instead of Microsoft's?

Really, why would any movie studio (beside Sony Pictures) prefer Sony's service over Microsoft's?

Just because Sony has Sony Pictures doesn't mean they'll have more content. In fact, I think just the opposite.

Ironhide Delta @ Nov 9th 2006 3:53AM

This is a very good point. With a download service available and already hooked to the living room tv, that ambiguous black box may come true for one company at least.

bobbytomorow @ Nov 9th 2006 12:31AM

"1. Let's think this through.

Suppose I'm Paramount, one of Sony's biggestcompetitors in the movie biz. Why would I want to release movies on their service instead of Microsoft's?

Really, why would any movie studio (beside Sony Pictures) prefer Sony's service over Microsoft's?

Just because Sony has Sony Pictures doesn't mean they'll have more content. In fact, I think just the opposite."

Maybe you should leave the thinking to people who can actually know.

Sony Pictures holdings:
Tri Star
Triumph
MGM
United Artists
Movie Link(incidentally a joint venture with Paramount)
Game Show Network
Merv Griffin Entertainment
Revolution Studios (distribution contract)
Screen Gems

many more... This is all not including the studios that have pledged support to Blu-Ray:

20th Century Fox
Vivendi
Universal
Paramount
Walt Disney
Warner Bros

List of MS movie holdings:

*cue crickets chirping plz*

gb @ Nov 9th 2006 1:17AM

I have On Demand through my cable, and I don't have to wait for movies to download. No HDTV movies, but now Netflix has Bluray and HDDVD discs for rent.... so why the hype?

It's an extension of their console system to encompass their "media center" strategy, just like what everyone else is trying to do.

lets just put the gun down and we go get me those fries @ Nov 9th 2006 5:00PM

bobbytomorow laid tha muthafuckin smackdown right there, u gotta love it when people go through the trouble to back up their shit with facts and statistics instead of senseless rhetoric like many people do in vein around here. props bobbytomorow.

OH AND WHY WOULD THEY PREFER SONY TO MS, BECAUSE SONY HAS A FREE SERVICE, MEANING THERE ARE MORE POTENTIAL CUSTOMERS AVAILABLE THAN THE XBOX360 HAS. PLUS ITS NICE TO SIDE WITH A COMPANY THAT IS MAKING THE BLURAY INSTEAD OF MS THATS NOT REALLY DOING ANYTHING FOR THE STUDIO IN THE LONG RUN.

jose @ Nov 9th 2006 1:21AM

It seems that all the MS fanboys complained about Sony trying to become the center of everyones livingroom,now that MS has entered the arena its such a great idea.What happened to those guys who said they just wanted a console to play games?I don't have an issue with MS getting into this area, i just wish people would stop hating when it's not the company they favor making these changes.Does it still stand that if you wanted a multimedia device you'd get a PC?

Tony @ Nov 9th 2006 1:18AM

I dont see why Sony Pictures would be so worried about distributing through microsoft.

Its my guess that sony pictures operates mostly independently of Sony computer entertainment, and to them distributing through another product would just be another revenue stream.

Certainly if SCE are thinking that making Sony picture stuff exclusive will sell PS3's i think they are mistaken

Morder @ Nov 9th 2006 1:49AM

jose: "What happened to those guys who said they just wanted a console to play games?"

We're just waiting for the Wii to come out.

Saint @ Nov 9th 2006 2:16AM

But MS isn't force feeding us a proprietory format like BluRay and MS isn't forcing us to buy hardware we don't want like HD-DVD disc drives either. We can have it if we 'want' it.

This is turning out to be an interesting battle for the living room. But for now, my money's going to MS for the Zune/360 combo and the Wii.

gamerx @ Nov 9th 2006 4:51AM

Saint,

I agree. Xbox 360 is a more dedicated video game system than PS3 is. This is the reason the 360 is $100 to $200 cheaper. MS isnt trying to shove an HD movie format down gamers' throats. Look at how well UMD movies turned out for Sony. They just cant get a clue. This gen its Wii-360-DS combo for me. I might pick up a Zune for music/video playback though.

Aaron Johnson @ Nov 9th 2006 12:35PM

Few things I wanted to comment on before I get on the article, which concerns some ridiculous comments.

(from 7) "But MS isn't force feeding us a proprietory format like BluRay and MS isn't forcing us to buy hardware we don't want like HD-DVD disc drives either. We can have it if we 'want' it."

Are you understanding what you are saying, MS is one of the companies leading proprietary services and now implementing it in their hardware (360 and Zune). To stop all the next-gen DVD war, I will make 1 comment that would change the world. That would be, instead of buying a native Blu-Ray or HD-DVD player, there are cheaper more entertaining options like the PS3 and the Xbox360 which both are cheaper then native players. If you want to take a ride on the next gen video security fiasco, be my guess but any buyer would note that the gaming systems are cheaper and adds productivity way beyond traditional players.

How can you say MS is not proprietary when you had to have XP Media Center OS (let alone a capable high-end PC) to enjoy your videos via 360 until this past fall update, which is almost a year since the systems debuted? Microsoft now offers video playback and other natural media services through its Zune and USB drives, but still being Mr. Proprietary with the streaming as it requires you to use 2 of either service they have built that is exposed for XP OS’s. Windows Media Player 11 and Windows Media Connect are self surrounding the box with it's oh so lovely windows media video formats. Who on planet earth can say they have a $41tload of WMV files floating around on their PC’s – so your solution is to transcode your videos to WMV and enjoy the ever low graded blotched material on your television. Or enjoy the premiums of new HD material offered by the sneaky MS that has planners probably laughing at this comment (that the plan is going to work). It all starts on the 22nd, and stepping into this market so quickly already states the power and extensive resources of MS behind the Xbox360’s updating possibilities and future implementations. (POWER OF FIRMWARE UPGRADE) Be afraid – VERY AFRAID.

Kudos to Mr. bobbytomorow - your comments make more sense, but get out of the corporate thinking for a minute and take a step back to a consumers mind which relates sales. MS wants everyone to go onboard and companies are going to follow but get greedy as their vocal leader, MS. Grabbing some hardware royalties seems like a good idea for the video companies and it shows from the UMG’s approach by charging $1 per Zune sale. MS will have to do more then that to earn these companies heart let alone to secure their self; they have to start delivering results which extends their partnership relations. How is this going to be achieved? In my opinion it is definitely Xbox Live Video as a start, the service will only be exclusively available to the 360 which is the counter but hey, a starts a start. This is the least concern for MS as this is where they have a community to infect as I call it. And they are doing it very well with the content addition and more future implementations.

The reason I stated this as a contagion is because it will spread greatly under its own community it has now, but as well it represents a better quality video then any transcoded files by far. The infection = taking a community and throwing services at them. Look at Skype, Google, Yahoo, Youtube, or any web service business - you call it. All of these successful web serviced companies that built communities (some purchased) around a service and then threw a bunch of other (some un-useful) services on top of that. It is what web 2.0 is about in my opinion.

CyKiller (yeah that CyKiller)

Jeff @ Nov 9th 2006 7:53AM

"Suppose I'm Paramount, one of Sony's biggest competitors in the movie biz. Why would I want to release movies on their service instead of Microsoft's?"

That's beside the point. In most cases, every individual film - and indeed, every individual TV show - must be licensed for download separately. And there's no one company that has control over any given film or show - production companies, distribution companies, in many cases individual producers, directors, even actors have contracts that stipulate they have a say over how their content is distributed. The original contracts generally have "home video" rights built in, but not download rights. It's not even a standard clause *today*, so this still applies to new TV shows and films being produced *now*.

"Maybe you should leave the thinking to people who can actually know."

Yeah, you don't know jack, buddy.

I'm actually involved in trying to get some of the films and shows my TV network shows onto iTunes right now. It's hard enough to do it with shows we *own outright*, i.e. have produced ourselves. It is nearly impossible with any films or shows produced out of house, i.e. nearly all of them.

Older movies, meaning anything produced before, say, 1990, are going to be nearly impossible for any studio to license for download because of stipulations in those original contracts and the fact that many of the people that would need to sign off on a new distribution model are no longer available for whatever reason. (In some cases, they may even be dead. Certainly that's true of a lot of films made before 1970.) Special efforts will probably be made for some of the bigger blockbusters, but don't expect to ever see most older films and TV shows ever made available. You see how we never got shows like Twin Peaks (season 2) or thirtysomething released on DVD, despite being among the most popular shows of the 1990's? It was because of rights issues - that's what happens when distribution models are not built into the original contracts. These are thorny problems that in many cases just cannot be resolved, and there is *no* provision for downloading in any of these original contracts.

I would imagine starting around 2010 or so, there will be a standard legal provision for download distribution. At the moment, nobody really knows what the successful model is going to turn out to be, so there is still no such standard provision. But after about that date, you will start to see *new* movies and TV shows having an easier time showing up on download services. But pre-2010 content will still be in the same legal black hole, and you'll never see it.

What that suggests to me is that it's not going to be until 2015-2020 or so before any one of these download services is at all compelling (in terms of having a decently large selection), and then it will have to be with mostly new content. Nobody's going to pull a Netflix and have a "long tail" style offering, which is how they've been so successful. And without that, I'm not convinced any legal download service is *ever* really going to take off. The whole appeal of Netflix is that you can get pretty much any movie ever made at this point.

You can say "oh, piracy will force people's hands" or whatever, but no, it won't. Because it's not about convincing people. It's literally about first figuring out who even has to be convinced, then tracking all of those people down, sitting down with their lawyers and hammering out new deals. It is a long, laborious, time-consuming process for every individual piece of content that in many cases just is not even possible. I mean my company has around 10,000 of these contracts in filing cabinets somewhere - who is even going to sit there going through all of them? You'd need a whole army of lawyers just to figure out where to even start the process.

I will be interested to see what Netflix does in January, because they have been planning their service for years now. I will be surprised - though not shocked - if they have actually taken that time to really do this right. It will be pretty amazing if they did, and that will then be something to watch. They will never get all 65,000 titles they offer to go for download, but maybe they could get half if they've really had a thousand lawyers working on this for the last three years. Still, it's not very likely.

MS obviously has the resources to do the same thing if they wanted to, but so far, their content offering has not shown me that they have the stomach for it. They're just offering what they could conveniently and easily get the rights to so far. And it's not as if they haven't also known for years that the Xbox and XBL is a trojan horse into the living room. So they've had plenty of time, and still this was the best they could come up with.

shase @ Nov 9th 2006 8:35AM

my question is... most people have cable tv... some have dish networks... thats about 60-100/month.. would anyone want to pay more money to watch a show on a 360? Also, can you transfer the data from the 360 HD to the computer? i would assume if you download any tv shows it will take quite a bit of space- with games and other crap it will fill up fast. I think they are going a bit too far. People arent that dumb....i hope

Evan @ Nov 9th 2006 9:24AM

@11
It could be CHEAPER to buy tv shows on the 360 than on cable.

I pay about $70/month ($840/year) for cable tv and PVR services. I could download a lot of episodes for $840! Even at $5 per episode, I could download all the tv shows that I normally watch, for cheaper than cable!

I fully intend to cancel my cable tv once download tv services mature.

Noel @ Nov 9th 2006 10:09AM

This is bound to fail. The PlayStation 3 as a digital media player will most likely fail as well.

I think everyone knows this is a ripe market, but I don't think any of the current options out there are likely to be the one to make it. I can't see any but my geekiest friends using any of these to watch movies.

Like the UMD format, I think there will be an initial buzz of early adopters checking it out simply because it's the new thing, and shortly thereafter it will fade from existence.

Apple has a shot at succeeding in this market, and I think Vista Media Center PCs with a cablecard capable video card will have a shot, but I think a success story in this market is still two years off.

Wild Homes @ Nov 9th 2006 3:11PM

I don't know what company will emerge victorious from this fracas to control our living room. I do know this, though: the 360's HD-DVD add-on uses the h.264 codec, right? and Microsoft as a software giant have of late been really pimping the notion of WMVHD, right? I haven't seen anyone (and I've been looking) talking about what codec will be used for the HD television content the 360 will provide us with, but smart money would suggest it's got to be one of those two and if it's WMVHD, that's a huge coup for Microsoft. the main reason we're all bothered about having to transcode all our videos is because traditionally no-one uses the WMV codec. but if Microsoft have negotiated to have the content providers for this whole 360-tv-and-movies thing support the format, that's a really big step insofar as getting WMVHD in place to be the standard for the next several years.

Sony aren't the only ones with a constant eye on controlling the way we get our media (Blu-Ray trojan horse, we're looking at you). Microsoft just generally aren't as arrogant about it.

solomonrex @ Nov 9th 2006 9:25PM

Jeff: Why not hire a company to digitize the contracts, so you can just search the results digitally (like Google Books)? There should be no file cabinets if there is money "locked up" in those contracts. Taking the long term view, it must be worth the investment to unlock those rights.

I understand the lawyers still have to be consulted to interpret the contracts, but if you're referring to file cabinets, that shouldn't be the hurdle. And digitizing opens the wide world of outsourcing to bring costs down to where it's worthwhile (if it isn't already).

ZeroCorpse @ Nov 9th 2006 8:14PM

I don't have cable TV anymore. All my network shows are in glorious HD via a pair of rabbit-ears. Cable-only shows are acquired over iTunes (Battlestar Galactica, South Park and Daily Show) or Adult Swim Fix (Venture Bros., Aqua Teen Hunger Force, Robot Chicken). Movies and series that I missed in first-run are via Netflix.

And the end result? I spend LESS on entertainment than I did with Comcast. Cable is overpriced, and you get a whole bunch of crap you never watch. I resent paying for Spike, G4, Game Show Network, and a variety of others I'll never use. Frankly, the quality of HDTV over the air is FAR BETTER than cable, and the quality of my SciFi show (Battlestar Galactica) is better online than it is from my local Comcast.

I take a quality hit on the Adult Swim stuff, but I can always rent the seasons from Netflix if I want to watch them in higher resolution.

Cable is over. The Internet is here.

ZeroCorpse @ Nov 9th 2006 8:16PM

@ lets just put the gun down and we go get me those fries

The video downloads are part of the FREE FREE ABSOFUCKINLUTELY FREE Xbox Live Silver. You don't have to pay for Gold to get the TV/Movie downloads.

GOLD IS ONLY FOR ONLINE PLAY OF GAMES. THAT IS ALL.

Swiper @ Nov 9th 2006 9:09PM

"Maybe you should leave the thinking to people who can actually know."

Ah, good idea. I *can* actually know, afterall.

Oh, perhaps you meant to say, "you should leave the thinking to people who know," to which I ask: do *you* know?

Really? I have my doubts.

Afterall, my post was about whether competitors to Sony Pictures would want to post their content on Sony's service. I didn't say that Sony Pictures didn't have a lot of holdings (they do), but that is beside the point. My post also didn't say anything about studios that have pledged support for Blu-Ray (many have), as that is also beside the point. I fail to see how Blu-Ray (or HD-DVD) has anything to do with a movie download service.

In fact, I believe you're actually in agreement with my original thought when you posted the following:

"List of MS movie holdings:

*cue crickets chirping plz*"

That was precisely my point. MS doesn't have any movie holdings, which means it isn't competing with any movie studios, and hence might have an easier time getting content on their service.

Now as Jeff points out, there's a lot more involved, but I still don't see how Sony has an advantage over MS in getting content from, say, Paramount.

Perhaps, you, my friend, should leave the thinking to people who think things through.

Swiper @ Nov 9th 2006 9:11PM

"OH AND WHY WOULD THEY PREFER SONY TO MS, BECAUSE SONY HAS A FREE SERVICE, MEANING THERE ARE MORE POTENTIAL CUSTOMERS AVAILABLE THAN THE XBOX360 HAS. PLUS ITS NICE TO SIDE WITH A COMPANY THAT IS MAKING THE BLURAY INSTEAD OF MS THATS NOT REALLY DOING ANYTHING FOR THE STUDIO IN THE LONG RUN."

Actually, MS has a free service too. It's called Xbox Live Silver.

Also, there are currently more potential customers on Microsoft's service. 6 million more at last count (and growing).

Lastly, I'm not sure I understand your point about Blu-Ray. Are you saying that Blu-Ray is good for movie studios? I suppose that might be true, but a movie download service also seems like it might be good for movie studios as well.