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Microsoft aggressive as lines between Internet, TV blur

Its moves worry competitors

July 29, 1997
Web posted at: 6:35 p.m. EDT (2235 GMT)

By Michael A. Hiltzik and Leslie Helm

The melding of the Internet and television is on the horizon, and Microsoft seems intent on taking control, a prospect that makes many wary and some doubtful.

Beginning with the new season, episodes of "Moesha" on UPN will carry more than just a story line.

Viewers with the proper equipment can watch the program in one corner of their screen, with the rest devoted to such interactive features -- "enhancements" in Microsoft parlance -- as windows for writing electronic fan mail, bringing up pictures and biographies of the stars and even buying knockoffs of the characters' costumes.

The catch, which makes the supercharged "Moesha" more than just another TV industry story, is that the enhancements will be accessible only to customers in good standing with Microsoft.

Their computers will have to be running Windows 98, the company's new operating system due on retail shelves next year, and will also need special TV-receiver circuitry designed and installed to Microsoft specifications. Consumers without any one of these pieces of the jigsaw will think they're just watching an ordinary episode.

Microsoft not only is promoting these enhancements, it paid for them too, hiring and assigning its own production team to work with the series' producers at a cost of $25,000 to $50,000 per episode. It's this tight embrace by one of the world's most ruthlessly competitive companies that has many in the television and telecommunications industries wary.

Whose standards will prevail?

Having already obliterated its major competitors in PC operating system software with Windows and largely obliterated rivals in such PC applications as word processing and spreadsheets, Microsoft, they fear, may now be preparing to ensnare the TV world.

"Very rapidly the (broadcast) industry is being forced to accept Microsoft as not a software company but as a company creating standards which it will control," says Philip J. Monego, chief executive of NetChannel, a South San Francisco provider of TV-based Internet services that aims to compete with Microsoft.

NetChannel is mounting a public campaign against the software giant. "This is very clever and very well thought out, but it has very sinister ambitions about it," Monego said.

For their part, Microsoft executives say they are simply demonstrating for TV and cable companies the range of tools available to help make digital TV, the high-capacity, high-quality medium that will gradually replace traditional analog TV broadcasts over the next decade, a useful service.

'There's a lot of jockeying'

"There's a lot of jockeying by a lot of companies" to develop features and content for digital communications, Microsoft Chairman Bill Gates said in a recent speech to securities analysts.

"Through collaboration with industries like cable and television, we'll figure it out. We need something in place to bootstrap it so there is a reason to transmit" digital TV.

That "something," he argues, should be Windows. For personal computers, it will be Windows 98. And for the majority of U.S. households that still don't have a PC but do have a television set, it will be Windows CE.

Windows CE is a stripped-down operating system that can deliver through a box that sits on top of a TV set, not only cable and satellite connections but links to the Internet and some conventional computer applications (and, Gates reportedly hinted to cable executives, a small royalty to Microsoft for every transaction executed through the system).

There are other signs that Microsoft intends to become more than a "collaborator" in the so-called broad-band melding of TV, telecommunications and computer networks.

Microsoft moves into strategic position

The company has moved with startling speed to seize a strategic position on this multibillion-dollar battlefield. Since January it has offered $425 million to buy WebTV, which provides Internet access to owners of conventional TV sets, and bought 11.5 percent of the cable operator Comcast for $1 billion. The WebTV deal is under federal antitrust review.

Microsoft has produced and demonstrated to executives all over Hollywood its "enhanced" prime-time programming, which includes not only "Moesha" but the WB network hour-long thriller "F/X" and the Sunday-night USA Network feature "Pacific Blue," a drama about California beach cops.

In addition to trying to persuade cable operators to accept its Windows CE set-top boxes, Microsoft has joined with Intel Corp. and Compaq Computer Corp. to get TV broadcasters to adopt a digital TV transmission format, known as "progressive scan," that works particularly well with PCs. The TV industry prefers a different standard known as interlace.

'I don't think Microsoft has a lock on this'

Microsoft faces major hurdles in securing domination of digital TV. Some observers believe the field is too young and diverse to be so easily conquered.

"I don't think Microsoft has a lock on this in the future," says James Murdoch, vice president for music and new media at News Corp., owner of Fox Broadcasting Co. and 20th Century Fox Studios. "A lot of operating systems are coming up where the playing field is level."

Some forecasters contend that PCs and TVs are likely to become similar in appearance and function, perhaps even a single hybrid appliance, as digital technology spreads from computer networks to video and cable broadcasting and telephone transmission. Already, a special Intel-produced PC card makes it possible to receive TV signals and related Web pages together on a PC screen.

"TV is really not competition" for computers," argues Sriram Viswanathan, a Beverly Hills-based representative of chip maker Intel's content group. "TV is an application of the appliance." That would play to Microsoft's strength.

The options are seemingly limitless

But it is still unclear whether the PC and TV audiences, one devoted to active, solitary interactions with their machines and the other to passive communal viewing, will merge quite as seamlessly as the hardware itself.

"I sit in front of a Windows computer all day," Murdoch says. "I don't think I want to sit on my couch and see the same damn thing."

A look at the demonstration versions of "Moesha" and several other Microsoft-enhanced programs gives a taste of the potential and the pitfalls of the new systems. The show itself is relegated to a TV-shaped rectangle, about one-third the size of the screen, in the upper right corner.

Along the left and bottom of the screen is an L-shaped space to accommodate the interactive features. In the case of "Moesha," these include blank windows in which viewers can type and read chat-room communications or send e-mail to series star Brandy Norwood and her fellow cast members.

Theoretically, at least, the possible functions in the L are endless. Viewers can also choose to do nothing, even expanding the TV space to fill the entire screen. An enhanced version of the New Orleans cooking show "The Essence of Emeril" offers written recipes, explanations of the chef's techniques, and order forms for his branded line of condiments and spices.

Microsoft executives and consultants say sports programs can offer scores, statistics, rosters and replays; broadcasts of soap operas, continuing series and movies can fill in latecomers with the stories.

Appeal not universal

Yet even they agree that acceptance of the hyperactive hybrid screens will not be universal. Microsoft executives say the divide tends to be generational, with younger producers or those targeting a younger audience more receptive to enhancements.

"We've worked with producers who immediately rattle off 15 things they want to do," says Paul Mitchell, manager of the enhanced-TV unit at Microsoft. "Others say they make films and aren't interested."

That suggests that some of the divide may be generic, with producers of serious dramas or comedies preferring to keep their viewers' eyes focused on the action.

"There will be a certain segment where this will have applications," says one broadcast executive who has viewed the Microsoft demonstrations. "But if you can't watch the program, are you talking about nothing but clutter?"

Just as critical as the creative issues are the commercial ones. Broadcast executives are no happier than writers and producers about encouraging viewers' attention to wander or ceding a portion of the screen to interlopers. Among other things, it could diminish the viewers' value to advertisers.

"If someone sits down to watch, we've got them for half an hour or an hour," says News Corp.'s Murdoch. "If we can enhance that experience, it's very valuable to us. But I don't know how necessary it is to have Microsoft do it for us."

Microsoft: Viewer holds the power

Microsoft representatives say these concerns are misplaced, that they're offering technology that creative minds can use as they choose.

"It's a unique skill to get someone to park their rear end in a seat for an hour," says Larry Namer, president of Comspan Communications, a consultant to Microsoft on the enhancement project. "Clearly, people don't necessarily find what's on TV compelling all the time. This gives (creators) storytelling tools that are totally optional for the viewer."

As for fears that viewers will wander or that broadcasters would be foolish to give away part of the screen, Namer argues that with digital technology giving viewers the opportunity to voluntarily divide their attention between a running TV segment and a simultaneously broadcast Web page, the only question is whether TV producers will control the material filling the L.

"If you, the producer of the TV show, do not provide the default space, the viewer will find it for himself," he says. "The days of your owning the screen are gone."

Copyright 1997 Los Angeles Times Syndicate  

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