Microsoft has been investing in interactive TV for more than a decade, but as of this month, the company can finally say it has a million customers.
Right now, there about 1 million set-top boxes running Microsoft's Mediaroom IPTV software. In the coming weeks, Microsoft said it expects to also have more than 1 million homes using its software. (The difference between homes and set-top boxes stems from the fact that some customers have more than one set-top box).
There are a lot of reasons why unit CTO Peter Barrett expects the IPTV effort to start paying off even more in the coming years. One is the move to on-demend television as opposed to just recording over-the-air content. While cable and satellite TV will struggle as content moves to HD, Barrett said that IPTV is equipped to handle lots of demand for on-demand content.
Barrett said the popularity of file-sharing services shows that consumers want to get their content anywhere and everywhere. "People are voting for the utility of watching TV on their PC by doing it the hard way," he said. "Setting aside that BitTorrent is largely illegal, it's a chore to use."
There is a strong market, he said, for combining the wide selection and quality available via file-sharing, with the ease of use of traditional TV.
"You can't operate BitTorrent with a beer in one hand and a remote in the other."
Eventually, content could not only be sent throughout the home, but also available remotely on a PC or mobile device.
"These things are not part of the imminent service release, but are inevitable," Barrett said. "It's the sort of thing that's really, really hard to do if you have a broadcast infrastructure."
Microsoft also expects the merging of its IPTV and Media Center PC efforts to ultimately mean that developers can write interactive applications that can run on either set-top boxes or PCs.
"The roadmaps will converge and you will be able to develop for both," Barrett said. "That's not part of the current release but it is part of a subsequent release."
In particular, Barrett said he can imagine the kind of bonus interactive features included on high-definition DVDs to eventually be available on video sent to Media Center PCs or Mediaroom set-top boxes. Already, a number of developers are writing programs that can sit on top of Microsoft's interface.
At CES, Microsoft is showing several, including a social networking program from eMuse called MyMap and a NASCAR application that could be used by TNT to show in-car cameras atop live race footage as well as an interactive boxing program from Showtime that would allow viewers to choose from different live audio feeds, such as the referee, each boxer's trainer, and the commentator.
While it has some advantages, Microsoft still faces challenges in the IPTV arena. To date, it's feature set has not been to different from that of satellite and cable, making it a tough sell. There have also been some outages and other growing pains to contend with.
To help show how its service is unique, AT&T has been having Tupperware-like parties in San Antonio, one of the cities where it is conducting trials of the Mediaroom service.
Microsoft hopes that the pending addition of new features, like whole-home DVR, will help further its appeal.
Barrett concedes that the effort has taken somewhat longer than Microsoft had hoped to reach this point. "This is a big complicated application," Barrett said. "We're happy with where we are after four years. We would have loved to do it in three. Nobody ever lost money betting software would take longer than expected."
While Microsoft's interactive TV effort stretches back longer, its modern approach of sending TV over Internet Protocol is only a few years old.