October 26, 2000 1:30 PM PDT

Will TV lovers pay the Ultimate price?

Microsoft announced pricing Thursday for its UltimateTV satellite service, which allows customers to record their favorite TV shows onto a hard drive, surf the Internet, and play along with game shows.

The service, announced in June, will be launched in conjunction with satellite service provider DirecTV and consumer electronics giant Thomson Multimedia, which makes the set-top boxes. The service will likely launch in December, Microsoft said.

For $9.95 a month, subscribers get the digital video recording service, interactive television and three hours of Internet access. Those who want more Net access can either use their own Internet service providers and pay $14.95 per month or hand over $29.95 each month for unlimited UltimateTV access. None of those prices includes DirecTV's monthly fee for satellite TV or the cost of the set-top box, which can run several hundred dollars.

Karl Empey, Microsoft's product marketing manager, said the consumers most likely to subscribe to UltimateTV will probably have an Internet service provider already, so most will probably opt for the $14.95 plan. There's one catch, though: UltimateTV is compatible with many ISPs, but not with America Online.

"AOL has chosen not to conform to some industry standards," Empey said. In addition, AOL is in the process of launching its own interactive TV service, called AOLTV.

UltimateTV basically combines Microsoft's WebTV Plus service with satellite TV and a digital video recorder. WebTV Plus offers interactive television, Web browsing and email.

UlimateTV puts Microsoft in direct competition with the pioneers of digital video recording: TiVo and ReplayTV.

TiVo charges $9.95 a month or a $199 lifetime fee for its service, which does not include interactive TV or Internet access. ReplayTV's service is free, although the set-top box is priced higher than a comparable TiVo unit to make up for the lack of a monthly fee.

Empey noted that the UltimateTV boxes will have two tuners, meaning subscribers will be able to record one show while watching another, record two shows at the same time, or watch two programs using the picture-in-picture option.

Analysts have said digital video recording, while a popular feature, is likely to be most widely adopted when it is included with other services, such as interactive television. Digital video recording allows a person to record a show onto a hard drive instead of a traditional videotape.


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