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Microsoft moves to forge showbiz ties

Now that it has appointed its “point person” in Hollywood, Microsoft is aiming to push ahead into entertainment by signing major deals with the biggest media congloms.

In short, with $25 billion in cash at its disposal, the tech giant wants a vastly bigger piece of the showbiz pie.

On Monday, Microsoft named former Universal Television & Networks Group chairman Blair Westlake as head of a unit that will spearhead media and entertainment partnerships. (Daily Variety, July 19)

It’s a major expansion of Microsoft’s efforts to persuade Hollywood to adopt its arsenal of technology applications — Windows Media content creation and anti-piracy protection, digital cinema systems, and Internet service and gaming consoles for online distribution. Company hopes to make its technology as ubiquitous and profitable in the media biz as it has on PCs.

It has already spent billions of dollars over the years pushing into entertainment, taking heavy losses for its Windows Media, Xbox and MSN groups and spending nearly $10 billion on cable TV investments with the so-far largely unrealized hope of deploying its software on set-top boxes.

Insiders say Microsoft’s now offering entertainment companies deep discounts to use its technology, with an eye toward setting itself up as the Hollywood standard.With the appointment of Westlake as corporate veep for the media/entertainment and technology convergence group, Microsoft is hoping a Hollywood insider will help it be the go-to partner for media congloms as they go digital.

Company already has what one exec described as “testing the water” deals with Disney and Time Warner.

“This appointment means we’ll be able to develop business engagements that move beyond trials into companywide deals,” said Will Poole, senior VP for Windows. “We want to have deals with major media companies that span Windows, Xbox and MSN.”

Westlake will report to Poole and corporate VP for consumer strategy and partnerships Henry Vigil.

Pulling in new biz

In addition to working with the congloms, Westlake will reach out to emerging digital entertainment businesses.

New division was prompted in part by Microsoft consultant Warren Lieberfarb, who has advised the company on its dealings with Hollywood and introduced its execs to Westlake.

Microsoft said it is expanding its strategic relationship indefinitely with the former Warner Home Video prexy’s firm, Lieberfarb & Associates, to provide media and entertainment advice.

One of the primary barriers to gaining a foothold in the media biz has been execs’ reluctance to harm their businesses while pursuing risky digital investments, especially for congloms that got burned during the dot-com bust.

Microsoft hopes that hiring Westlake will assure Hollywood it understands its challenges and doesn’t want to cannibalize businesses.

“We want what we do to add to existing entertainment businesses,” Vigil said. “Blair’s expertise in traditional distribution channels helps people feel comfortable that we understand their challenges, but he can also convince them that there’s an upside to moving quickly.”

Westlake will also coordinate Microsoft’s public policy work on content protection and digital media standards.

Digital music push

Microsoft is planning a major push into digital music, dominated by Apple’s iTunes. It’s launching its own online music store this fall and is releasing an updated version of its digital rights management software, code-named Janus. System allows consumers to transfer rented digital music onto portable devices while paying a monthly subscription fee rather than buying each song outright.

Later this year, the company will release its line of Portable Media Centers, iPod-like devices that play music and movies and display digital photos.

In addition, the next version of Xbox, skedded for release in late 2005, will likely feature a broadband Internet connection and act as a hub to transfer digital content between devices in the home.

Since ending his nearly 20 year tenure at U in 2001, the 49-year-old Westlake, a lawyer by training, worked briefly at Gemstar-TV Guide and was a consultant for Comcast and GE-NBC.

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