Microsoft Is Said to Add Comcast, Verizon Pay TV to Xbox Live (BLOG)

Microsoft Corp. plans to offer online pay television service fromComcast Corp. (CMCSA) and Verizon Communications Inc. (VZ)through Xbox Live, in an bid to channel more entertainment to its video-game console, people with knowledge of the situation said.

Microsoft, based in Redmond, Washington, is in talks with almost two dozen providers of music, sports, movies and TV shows in the U.S. and Europe, and may announce an expanded Xbox Live streaming service as soon as next week, said one of the people, who weren’t authorized to speak publicly.

Chief Executive Officer Steve Ballmer is promoting the Xbox 360 console as a way to switch easily between games, DVDs and pay TV. He said on Sept. 14 that by Christmas, Microsoft will add the Bing search engine to the Xbox and use its Kinect controller’s voice recognition to sift through shows on the Web.

“We all know the frustrations of using guides and menus and controllers, and we think a better way to do all of this is simply to bring Bing and voice to Xbox,” Ballmer said at a developers conference. “You say it, Xbox finds it.”

Microsoft also expects to sign deals with Time Warner Inc. (TWX)’s HBO cable channel, Sony Pictures Entertainment’s Crackle streaming service, NBC Universal’s Bravo and Syfy channels and Lovefilm UK, a subsidiary of Amazon.com Inc. (AMZN), the person said.

Wayne Hickey, a spokesman for Microsoft, declined to comment, as did Bobbi Henson, a spokeswoman for Verizon, and Jennifer Khoury of Comcast, which controls NBC. Greg Belloni, a Sony spokesman, had no immediate comment. Dorothy Jean, a spokeswoman for Lovefilm, declined to comment. An HBO spokesperson declined to comment.
Pay-TV Tether

The new applications from Philadelphia-based Comcast’s Xfinity TV service and New York-based Verizon’s FiOs would require users to prove they already are pay-TV customers in regions where the services operate, two of the people said.

The Xbox 360 plays DVDs and video games, and owners can pay $60 a year for the Xbox Live premium service, which allows for multi-user play over Web. Console owners can also add subscriptions to Netflix Inc. (NFLX)’s and Hulu LLC’s online film and television services, and pay-TV through AT&T Inc. (T)’s U-verse in its markets.

The surge in online entertainment has thrust the Xbox 360 and its console rival, Sony Corp. (SNE)’s PlayStation 3, into competition with other Web-connected devices in the home, from DVRs to television sets.
Microsoft’s Moves

Since last year, Microsoft has integrated social networking features into Xbox Live, letting viewers chat with each other while watching movies and shows. The company announced in June that 35 million people used its paid Xbox Live service around the world, spending an average of 60 hours a month playing games and watching entertainment.

Comcast had 22.5 million pay-TV customers as of June 30. Verizon Fios had 3.8 million.

Cable and satellite TV providers such as Comcast are looking to stem defections by putting their services on more devices and making it easier for them watch.

In June, Comcast CEO Brian Roberts demonstrated a TV interface called Xcalibur that uses Web-connected servers to forgo the need for a set-top box at all.

Microsoft fell 9 cents to $25.58 yesterday in Nasdaq Stock Market trading. Comcast lost 33 cents to $22. Verizon slid 5 cents to $36.84 in New York Stock Exchange composite trading.