TV Strategy Takes Shape

The UltimateTV service is expected to be available in March, marking a significant step forward for Microsoft’s enhanced TV strategy. UltimateTV, which allows users of the DirecTV satellite TV network to digitally record programs (including two shows at the same time) and to interact with television programs, among other functions, is the first enhanced TV product based on the Microsoft TV (MSTV) platform. It also indicates Microsoft’s continuing interest in creating, marketing, and operating its own enhanced TV services, despite a lack of strong consumer demand.

The term “enhanced TV” describes any function, other than normal television viewing and channel selection, potentially available through a television set. (For a complete list of these functions, see the sidebar “Enhanced TV Applications“.) In addition to UltimateTV, Microsoft has announced a host of other enhanced TV initiatives and products for consumers, network operators, and developers since Nov. 2000. To understand why Microsoft continues to expend resources on this unproven market, one must first understand the technology behind it and where Microsoft sees potential revenue streams. Confusing terminology and conflicting marketing messages combine to make this a challenging task.