Why is Microsoft eyeing TV again?

Jim BartholdMicrosoft (Nasdaq: MSFT), as it is wont to do, is floating trial balloons about whether it should use its popular gaming platform to get into the TV business. This would be huge news if it were the first time Microsoft has leaned in this direction; it isn't. Over the past two decades Microsoft has repeatedly tried to get into television--going all the way back to the start of digital era, if you want to look that far--and it's never turned out well.

There are logical reasons for wanting to get into the TV business, although with all the doomsaying about cord cutting and subscribers leaving cable those reasons seem less apparent these days. Delivering cable TV opens up a wealth of interrelated--horizontal, one might say--opportunities to link content (in the cable business it's known as programming) and hardware. In Microsoft's case this would mean a link between its Xbox gaming platform and its software.

The marriage of Microsoft and cable would seem about as appropriate as the one between Netflix (Nasdaq: NFLX) and movies and TV shows. And the problems might be just as apparent, if not more so. Netflix, which is the guiding light of the new breed of over-the-top content providers, is dominating the space and creating true fear among service providers by expanding on what it does best: delivering movies. It's just taking its online movie rental model a step further by putting everything online.

That's a bandwidth-consumptive process that could put a strain on broadband providers--real or imagined. It's at the heart of a public spat between Comcast (Nasdaq: CMCSA) and Level 3 Communications (Nasdaq: LVLT) that's drawing attention to the MSO for all the wrong reasons as its fights its own torturous battle to acquire NBC Universal and "horizontally" integrate its programming into the Comcast hardware-based service delivery process.

Nevertheless, bandwidth problems or not--and there is some belief that these are more imagined than real--Netflix has come up with a smart model because it basically just leverages what the company is already doing.

Microsoft and TV is another thing. TV has been a glint in the Redmond giant's eyes since the days when a small group of vendors and a single service provider tried to dominate the digital cable space. It was John Malone of TCI who announced the 500-channel universe; it was Microsoft in the background that was going to provide the software. That didn't happen for many reasons, primarily because the rest of the industry suddenly developed a backbone and stood up to Malone (and thus sprang MPEG), but it showed early on that Microsoft wanted a piece of the TV action.

Since then Microsoft has tried Microsoft TV, which didn't make nearly the splash of Apple TV (Nasdaq: AAPL) or even the flailing, but still trying Google TV (Nasdaq: GOOG). It's tried investing money in Comcast. And it's incessantly tried to find ways to put some form of television on its Windows platforms.

The thing is, Microsoft can't seem to crack the 55-inch laid back experience the way it's done with the 23-inch lean forward. A few folks with Apples in their eyes would deride Microsoft's efforts in the PC space; the rest would concede that the software giant has, for better or worse, dominated that arena. But when it comes to TV, Microsoft again appears to be on the outside looking in, trying to morph its lean forward experience into the lean back, laid back television space. It hasn't worked before and it's unlikely to work this time.--Jim