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Microsoft may offer pay TV via Xbox

Bloomberg News / September 30, 2011

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NEW YORK - Microsoft Corp. plans to offer online pay television service from Comcast Corp. and Verizon Communications Inc. through Xbox Live in a bid to channel more entertainment to its video-game console, people with knowledge of the situation said.

Microsoft, based in Redmond, Wash., is in talks with almost two dozen providers of music, sports, movies, and television shows in the United States and Europe, and may announce an expanded Xbox Live streaming service as soon as next week, said one of the people, who were not authorized to speak publicly.

Chief executive Steve Ballmer is promoting the Xbox 360 console as a way to switch easily between games, DVDs, and pay TV. He said on Sept. 14 that by Christmas, Microsoft will add the Bing search engine to the Xbox and use its Kinect controller’s voice recognition to sift through shows on the Web.

“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,’’ Ballmer said at a developers conference. “You say it, Xbox finds it.’’

Microsoft also expects to sign deals with Time Warner Inc.’s HBO cable channel, Sony Pictures Entertainment’s Crackle streaming service, NBC Universal’s Bravo and Syfy channels, and Lovefilm UK, a subsidiary of Amazon.com Inc., the person said.

Spokespersons for Microsoft, Verizon, Comcast, Sony, Lovefilm, and HBO declined to comment.

The surge in online entertainment has thrust the Xbox 360 and its console rival, Sony Corp.’s PlayStation 3, into competition with other Web-connected devices in the home, from DVRs to television sets.

Since last year, Microsoft has integrated social networking features into Xbox Live, letting viewers chat with each other while watching movies and shows. The company announced in June that 35 million people used its paid Xbox Live service around the world, spending an average of 60 hours a month playing games and watching entertainment.

Comcast had 22.5 million pay-TV customers as of June 30; Verizon FiOS had 3.8 million.

Cable and satellite TV providers such as Comcast are looking to stem defections by putting their services on more devices and making it easier for them watch.