Microsoft to offer online content

The videogame biz is moving front and center in Hollywood’s digital distribution plans.

Microsoft will offer movies and TV shows on-demand via its Xbox Live Internet service, which connects directly to Xbox 360 vidgame consoles, beginning Nov. 22.

Warner Bros., Paramount, CBS, MTV Networks and Turner are aboard at launch. Microsoft is in various stages of talks with most other studios and several other nets to add their content as well.

WB will offer some of its movies in high-def, as will CBS with most of its TV shows. Microsoft deals mark the first time any studio or network will be distributing HD content via the Net.

Due to the limited size of the 360′s hard drive, Microsoft won’t be selling permanent downloads, only digital rentals in the video-on-demand window. As with other online rental services like Movielink and CinemaNow, studios will get a revenue share on each rental.

New TV shows will be available the day after they air.

With the exception of iTunes’ TV sales, most Netcos offering digital downloads and rentals have seen light demand. Industryites are hopeful Microsoft could prove an exception, however, as it has a direct pipeline to the majority of the 3.6 million Xbox 360 units already sold in North America with a hard drive and offers an easy way to play downloads on a TV.

“A lot of people have said that one reason PC downloads haven’t taken off is you can’t easily play back on a TV,” noted Paramount digital distribution prexy Tom Lesinski. “This will be a great opportunity to test whether fixing that can create a lot of extra demand.”

Originally designed to enable online videogame play, Xbox Live has expanded to allow users to download arcade games and demo levels of new games. In addition, Microsoft recently started working with studios and networks to offer promotional content such as the “Mission: Impossible III” trailer and a free episode of “Battlestar Galactica.”

Sony execs have said they’re interested in distributing movies and TV shows via the online network for the soon-to-launch PlayStation 3. Given the difficulties of building a system that can compete with Xbox Live, however, it likely won’t be doing so in the near future.

In the meantime, Sony Pictures is the one studio that definitely won’t be part of Xbox movie downloads.

Given its direct connection to the TV through its videogame console, Xbox Live essentially will be a competitor for cable VOD. Though its install base is small compared with that of major cable operators, Microsoft does have the advantage of a loyal, hard-to-reach young male demo, and much of the content, such as “Jackass,” “Reno 911,” “V for Vendetta” and “Star Trek” in HD, was selected to appeal to them.

On-demand service also will soon go up against Apple’s iTV device. When it launches early next year, it will allow users who download TV shows and movies onto a PC to play them on a TV.

WB will be the first studio to offer high-def movie downloads, which it’s hoping will appeal to users of Microsoft’s HD-enabled console.

“You have a group of people who are really committed to high-def gaming activity, so it seems like the perfect marketplace to test distributing high-def movies,” said Simon Kenny, prexy of WB digital distribution.

Microsoft hasn’t revealed its pricing plans, but Xbox Live is expected to be competitive with other VOD sites, ranging from 99¢ for some TV shows up to $4.99 for the newest pics. High-def pics may cost $1 or $2 more to rent.

Rather than going through a separate credit card transaction for each rental, Xbox Live downloaders will utilize the “Microsoft Points” already used to buy vidgame content on the service. Though it makes transactions simpler, many gamers have complained that Microsoft Points are sold only in certain increments, such as 1,600 points for $20, and can obscure the true price.

Microsoft’s soon-to-launch Zune portable music and video device will use the same points system, leading to speculation that Xbox Live downloads may work on a Zune and vice versa, though they won’t at launch.

WB is making its full library of digital content available for downloading in standard def, ranging from “Studio 60 on the Sunset Strip” to “Batman Forever,” but has selected a handful of pics targeted at young males for high-def, such as “Superman Returns” and “V for Vendetta.”

Likewise, Paramount picked content aimed at the gamer demo, such as “Nacho Libre.” All of the primetime skeins that CBS owns, including the three “CSI” series and “Survivor,” will be available, along with several shows from its library.

Other video content available for download via Xbox Live by the end of the year will include many of Cartoon Network’s “Adult Swim” shows; numerous series from MTV, Comedy Central and VH1; and “Ultimate Fighting Championship.”

Microsoft is also about to launch an HD DVD accessory for $199 that will plug into the Xbox 360 and play movies in the high-def format.

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