Microsoft to launch Xbox TV later this year

@CNNMoneyTech September 15, 2011: 6:34 AM ET

ANAHEIM, Calif. (CNNMoney) -- Microsoft is trying to succeed where Google, Apple and Sony have all flopped: The software giant wants to change the way people watch TV.

At Microsoft's financial analyst meeting in Anaheim, Calif., on Wednesday, CEO Steve Ballmer previewed the new Xbox TV platform that will launch this holiday season.

The demonstration was short on critical details like content partners, pricing, and what movies and shows will be available. But Ballmer said Microsoft would be working alongside "dozens or hundreds of additional video content suppliers" to grow the content choices available on the Xbox.

In addition to video on-demand, that Xbox content will include live television. Ballmer said the live TV offerings will include "news, sports, and your favorite channels."

It's not clear exactly how that will work, but Ballmer hinted it will be similar to what Microsoft (MSFT, Fortune 500) has already done with foreign partners like Sky TV in the United Kingdom, Canal Plus in France, and FoxTel in Australia. Those partnerships allow Xbox customers to stream a limited set of channels right through the Xbox, without requiring them to install any additional equipment like cables, satellite dishes or set-top boxes.

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Microsoft believes the key differentiator between Xbox as a TV platform and the sea of failed competitors will be its voice and motion search tool. Utilizing the Kinect attachment, users will be able to navigate through content with voice commands. The search function will be powered by Bing.

"Having all of that content is right on, it's fantastic, but it brings a new challenge with it," Ballmer said. "Certainly we all know the frustrations of using guides and menus and controllers, and we think a better way to do all of this is simply to bring Bing and voice to Xbox. You say it, Xbox finds it."

In the demonstration, a Microsoft employee announced, "Xbox, Bing 'The Office,'" and the television immediately displayed all of the available seasons of NBC's "The Office" for on-demand viewing. Another voice search, in theory, could allow users to navigate to a particular season or episode, but that demo failed.

"It's a good thing that's shipping for Christmas," Ballmer quipped, to laughter from the audience.

Microsoft also hopes to integrate its community of 35 million Xbox Live users to create a social experience around watching TV and movies.

"The vision is kind of simple," said Ballmer. "You should have any entertainment you want with all the people you care about, really simply and on any screen."

The fact that the Xbox is the top-selling gaming console will give it a leg up over the competition.

"Microsoft has a very large install base," said Van Baker, an analyst at Gartner. "This is not about going out and buying a new piece of hardware, it's about adding capability to device that already exists in living rooms. It greases the skids for them to get further into the content game."

But can Xbox TV succeed where Apple TV, Google (GOOG, Fortune 500) TV and many others have failed -- including Microsoft, with Windows Media Center? Can it become more than just a "hobby," as Apple (AAPL, Fortune 500) chairman Steve Jobs likes to call Apple TV?

Some analysts believe Microsoft is uniquely positioned to succeed.

"Microsoft has been around the content world long enough to know how to license content -- they surely won't forge forward without appropriate content deals like Google did with Google TV," said David Wertheimer, executive director of the Entertainment Technology Center at the University of Southern California.

Wertheimer believes that instead of trying to license content from providers like News Corp. (NWS), Comcast (CMCSA, Fortune 500), Disney (DIS, Fortune 500), and CBS (CBS, Fortune 500) themselves, Microsoft will instead use a "TV Everywhere" model, in which existing cable and satellite subscribers will be able to access their content on the Xbox. TV Everywhere is an idea championed by Time Warner (TWX, Fortune 500), parent company of CNNMoney.

Why would customers want to stream content to their Xbox when they already have that content on their TV? That's where Microsoft's voice search, motion navigation and user interface come in.

"That's the opportunity here for Microsoft -- can they work with the content owners to innovate on top of the content itself and provide a higher-value experience to consumers?" Wertheimer asked. "If they can, this could be big and meaningful."

But others think that model is inherently flawed.

"Is there anything Microsoft is doing that hasn't been done by other providers? No, not really," said Gartner's Baker. "Search is not discovery. Search as an answer to discovery implies you know what you're looking for. Most people have no idea what they're looking for."

Discovery is what separates Netflix (NFLX) from all of the other content delivery channels: Netflix's recommendation tool clues users into new content that they'll likely enjoy.

Voice search, motion control and a cool user interface are a good start. But if Microsoft can figure out how to intelligently drive users to new content, it may have something here. To top of page

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