DirecTV in the News

Microsoft Forms TV Alliance with DIRECTV

By Reshma Kapadia
June 12, 2000

NEW YORK (Reuters) - Microsoft Corp. said Monday it has formed an alliance with DIRECTV Inc. and Thomson Multimedia to market a new system that aims to make television more interactive and personalized by using the software giant's new UltimateTV service.

The RCA DIRECTV system will use the UltimateTV service developed by WebTV Networks Inc., which was bought by Microsoft in 1997, and which integrates digital video recording, Internet access and interactive TV. Financial terms were not disclosed.

The receiver for the system incorporates two satellite tuners from digital satellite TV provider DIRECTV, owned by Hughes Electronics Corp., and a hard disk drive for digital video recording.

Viewers will be able to watch two shows on DIRECTV at the same time, record over 30 hours of digital quality programming for later viewing, choose from more than 500 hours per week of interactive TV, and respond to promotions with their remotes, and e-mail through the new system, which is expected to be available by the 2000 holiday shopping season.

Current DIRECTV subscribers will be able to get the UltimateTV service, which also includes a limited amount of Internet time, for an additional, unspecified ``low fee.'' New subscribers will have to buy a DIRECTV satellite box, an RCA set-top box and UltimateTV service for an undetermined fee.

The new TV system will be marketed to existing DIRECTV, WebTV subscribers and other digital satellite viewers.

The concept of interactive TV, which marries some of the features of the Web with the TV, has caught on faster in Europe than in the United States, where viewers seem more interested in expanded choices and features like digital video recording.

Research firm Jupiter Communication expects 35 percent of U.S. households to use interactive TV services by 2005.

While Microsoft's WebTV and WebTV Plus products are focused on bringing the Internet to TV, UltimateTV is focused on TV and making it more enjoyable.

The announcement comes a week before Internet media giant America Online Inc.'s expected launch of its AOLTV service, which will allow users to surf the Web, ``chat'' and e-mail while they watch TV.

"We welcome AOLTV to the market. We think it squares up well versus WebTV Plus. It is in one of the worlds (Microsoft is in),'' said Robert Schoeben, senior director of marketing at WebTV Networks in an interview. He added that WebTV has products for two segments of the population: Those that want to get the Internet in their living room and those that already have a personal computer and want an enhanced TV experience.

"The brand we need to build is UltimateTV,'' Schoeben said. However, he added that Microsoft was working on launching instant messaging and streaming media for its WebTV product.

The new service will fall into Microsoft's consumer unit and within a group that includes MSN platform and WebTV.

DIRECTV, Microsoft and Thomson executives said users would come to discover features like interactive television by discovering such that they can pause live television and record two shows at once.

"They will learn and explore with the product just like they did with standard DIRECTV,'' said David Spomer, vice president of broadband digital decoder product management at Thomson Consumer Electronics. ``Many surveys show that (program guides) were not the main reason they (got) the service, but it is one of the main reasons they are satisfied with it.''

DIRECTV will introduce its new Advanced Program Guide that allows consumers to view program listings up to 14 days in advance as part of the package. It will also feature navigation search capabilities.

During a presentation, DIRECTV executive vice president Larry Chapman said the company would be introducing an AOLTV set-top box soon, which has a different set of services associated with it.

"There are elements of AOLTV that are the same as UltimateTV. From a product program standpoint, over time, we will see these set-tops gaining enough power and flexibility to be able to run a variety of services,'' he said.

The availability of subscriber equipment and infrastructure capable of delivering interactive services has reignited interest in interactive TV, but industry players have to wade through a complex platform landscape filled with a mix of networks, set-top boxes and software, Jupiter Communications said in a research report.

"We could use a standard, but we are not waiting for it.'' said Bradley Beale, senior vice president of DIRECTV's advanced products and new media group, told Reuters. The company's strategy was to develop the platform "that gets the most eyeballs.''