RealTime IT News

Microsoft Offers Discounted MSN TV

In a move to goose consumer interest in its Internet TV offering, Microsoft Corp. announced a new low-cost receiver and service plan for connecting televisions to the Net.

Through a partnership with Thomson's RCA unit, Microsoft will market the RCA RM 2100 Internet receiver, which will provide consumers will access to MSN TV for $99, with as little as $9.95 per month in subscriber fees. The company hopes the cut-rate pricing will attract customers to use their TVs as either a primary or secondary route to the Web.

"MSN is committed to making the Web incredibly useful for every consumer," Richard Bray, MSN vice president, said in a statement. "For people who have never been on the Internet and who are looking for an inexpensive, simple way to get connected, or for more experienced Web users looking for a secondary way to get online, the MSN TV service continues to be a great solution."

With MSN TV, consumers can surf the Web through a wireless keyboard or remote control, with access to MSN services like instant messaging, e-mail and Web browsing. The new discounted plan will include two free months of service, and five hours online for $9.95, with each additional hour costing $2.95. The current unlimited-access plan costs $21.95 per month. Microsoft said it would offer two free months of service to MSN subscribers who purchase at least one month of service and the receiver.

Despite early forecasts that pegged the Net and TV as a match made in heaven, Internet TV has not seen much success. "Web surfing on the TV hasn't really caught on, and the reason for that is it's not a really easy exercise," said Yankee Research analyst Adi Kishore. With PC prices falling so low and Internet penetration climbing, he said consumers have not looked at the TV as a way to the Internet.

MSN TV grew out of WebTV, which Microsoft purchased for nearly $425 million in 1997. While it has grown to about 1 million subscribers, Kishore said the market would likely remain a niche. "The opportunity for growth beyond a relatively small segment of the market doesn't really exist," he said. "The market hasn't really shaped up as WebTV had hoped."

AOL TV, which was launched in June 2000, has also struggled to find a mass market for its set-top boxes, Kishore said. AOL Time Warner does not break out subscriber numbers, but he estimates AOLTV has captured far fewer customers than MSN TV. In January, Microsoft scaled back staff at its Ultimate TV unit, which provides Internet service through DirectTV's satellite network.

In conjunction with its new pricing plan, Microsoft is launching an online and TV ad campaign to push MSN TV. Pitches will run on MSN.com for the rest of the year, while Microsoft plans to advertise the service on more than 20 cable stations during June and July.