Microsoft Jumping Back Into Show Biz
Microsoft Corp. is betting that the man behind “The Biggest Loser” can turn it into a big winner.
As rival Yahoo Inc. scales back original programming ambitions, the software giant plans to bulk up its MSN websites with a slate of new TV-style shows -- starting today with a multimillion-dollar development deal with the creator of NBC’s “The Office” and “The Biggest Loser.”
Ben Silverman’s Reveille production company will create online programs for MSN, which vies for Internet visitors against Yahoo, Google Inc. and AOL. Microsoft also plans to launch a series of home improvement Web-based episodes for women, produced by Be Jane Inc., a Burbank production company.
“We’re really at the point now where we can start exploring new possibilities of the Internet as a storytelling medium,” said Rob Bennett, MSN’s general manager of entertainment and video services.
MSN is undergoing a sweeping overhaul as it tries to keep pace with its highly profitable rivals. But most of the changes to date have involved new Web services, such as search and digital maps, under the Windows Live brand name.
Although Microsoft is jumping back into show business, analysts said the development deals did not appear to signal a return to the strategy of the 1990s, when Microsoft invested billions to launch original programming on MSNBC and websites such as Slate and Sidewalk.
“They have tried this before and it didn’t work, so I’m a little curious seeing them getting back into this,” said Matt Rosoff, an analyst with Directions on Microsoft. “But I wouldn’t expect Microsoft to do the kind of big push it did in the 1990s.”
Rather, Microsoft’s move into show business indicates a desire to boost advertising revenue.
Microsoft plans to unveil the partnerships at its annual advertising summit, which gathers together 700 of the company’s top advertisers at its Redmond, Wash., headquarters today.
Microsoft’s MSN services attracted 95 million U.S. visitors in March, ranking it behind only Yahoo, according to Nielsen/NetRatings.
But Microsoft has struggled to capitalize on that traffic; MSN’s fiscal third-quarter revenue fell 3%, contrasted with first-quarter growth of 79% for Google and 34% for Yahoo.
Online video ads generated only a fraction of the $12.5 billion spent on online advertising last year, but it’s growing fast. Yahoo and Time Warner Inc.’s AOL group have already been jockeying for position in the nascent market for video entertainment online.
AOL is developing several online shows, including an entertainment program, “Gold Rush,” with reality impresario Mark Burnett -- a deal MSN tried to win.
Led by former ABC television executive Lloyd Braun, Yahoo Media Group has launched three small-scale original video programs but recently said it was putting the brakes on trying to develop blockbuster shows until the economics catch up.
Bennett said product-placement deals would make the MSN shows profitable. But as Microsoft moves into the hits-driven world of show business, it can afford to take risks thanks to its cash cows, the Windows operating system and Office productivity software.
Microsoft last year tried to use some of its $35 billion in cash to buy a stake in AOL, partly in hopes of tapping some of Time Warner’s video programming. But Google, paying $1 billion for a 5% stake, won AOL’s hand.
“That didn’t work, so Microsoft is still looking for the content,” said Jupiter Research analyst Joe Wilcox. “They’re providing the technology but relying on people with greater expertise to handle the content stuff. That’s the way to do it.”
