Microsoft News Tracker

NBC Universal and News Corp. Announce Deal with Internet Leaders AOL, MSN, MySpace And Yahoo! to Create a Premium Online Video Site with Unprecedented Reach:

News Corporation and NBC Universal will launch the largest Internet video distribution network ever assembled with the most sought-after content from television and film, it was announced today by Jeff Zucker, President and Chief Executive Officer, NBC Universal and Peter Chernin, President and Chief Operating Officer, News Corporation. The video-rich site will debut this summer with thousands of hours of full-length programming, movies and clips, representing premium content from at least a dozen networks and two major film studios.

AOL, MSN, MySpace and Yahoo! will be the new site’s initial distribution partners. Their users, who represent 96 percent of the monthly U.S. unique users on the Internet, will have unlimited access to the site’s vast library of content. This media alliance will offer consumers free long- and short-form video and create a compelling platform for advertisers, targeting the rapidly growing audience of online video consumers. Charter advertisers include Cadbury Schweppes, Cisco, Esurance, Intel and General Motors.
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At launch, full episodes and clips from current hit shows, including Heroes, 24, House, My Name Is Earl, Saturday Night Live, Friday Night Lights, The Riches, 30 Rock, The Simpsons, The Tonight Show, Prison Break, Are You Smarter than a 5th Grader and Top Chef, plus hits from the studios’ vast television libraries, will be available free, on an ad-supported basis, within a rich consumer experience featuring personalized video playlists, mashups, online communities and video search. Plus, the extensive programming lineup will include fan favorite films like Borat, Little Miss Sunshine, Devil Wears Prada, The Bourne Identity and Bourne Supremacy with bonus materials and movie trailers. Post-launch, plans will be considered for acquiring additional content as well as producing and licensing original programming for the new site’s audience.

Its launch distribution partners will provide the biggest potential reach of any player on the Internet. Moreover, the new site will actively seek agreements with a variety of additional distribution partners.
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“This partnership is completely aligned with our continued investment in video on MSN and will allow hundreds of millions of our consumers to tune into a vast library of high-quality, safe and legal online video,” said Kevin Johnson, President, Platform and Services Division, Microsoft. “Our alliance proves that you can deliver quality online video entertainment and protect intellectual property and copyright at the same time. We look forward to working together to explore additional opportunities to distribute this content across other Microsoft services and devices.”

YouTube isn’t mentioned by name in the press release, but you don’t need a weatherman to know which way the wind blows.

Aside from the fact that it seems more about distribution than about network, the real question is how much YouTube will be hurt by the loss of commercial video in the face of its continued dominance in displaying the amateur variety. Of course, YouTube would be invited to join the network in less than a New York minute if they agreed to the media companies’ revenue sharing terms.

Update: Kevin Johnson’s formal statement is here. Best line:

Today’s announcement is a great win for MSN’s more than 460 million consumers and for online video more broadly.

Golly, such a deal!

Earlier this month it was revealed that Blake Irving, Microsoft’s Windows Live Development leader, and Christopher Payne, head of development for Windows Live Search, were leaving the company. Today, Benjamin J. Romano reports at the Seattle Times that Microsoft has tapped Satya Nadella to run a new Internet search and ad organization formed out of the pieces and reporting directly to Platforms and Services Division President Kevin Johnson:

Microsoft will try a new combination of leadership and organizational structure to lift its Internet search business out of the cellar.

The company on Wednesday named Satya Nadella … to head research and development for a new group combining both Internet search and the advertising platform through which search generates cash.

Nadella, who will take over by April 19, assumes responsibility for a high-profile, high-pressure part of the business where Microsoft has struggled against entrenched competition.

Last month, more than half of the estimated 3.6 billion U.S. Internet searches were done using Google. Yahoo! was second and Microsoft’s MSN/Windows Live Search was third with a 9.6 percent share, according to data released earlier this week by Nielsen//NetRatings. What’s more, Google expanded its market share by 40 percent in the previous year; Microsoft grew 9 percent.

We mentioned the NetRatings numbers on Tuesday and yesterday comScore reported an even gloomier picture for Microsoft. Nadella is used to gloomy pictures though - his previous assignment was leading the troubled Microsoft Business Solutions.

Update: Ed Oswald at Betanews reports that Tami Reller will be the temporary replacement for Nadella at MBS (aka Dynamics).

Neelie Kroes, the European Commissioner for Competition, had some choice words today for Microsoft, her favorite nemesis:

The European Union’s top antitrust official, Neelie Kroes, told the European Parliament on Thursday that U.S. software giant Microsoft continued to gain market share through abusive behavior.
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“Microsoft is constantly gaining market share and that is what is worrying me in the work group server operating market,” she said, referring to office servers used to print, share files and allow users to sign in.

“As a consequence of your abusive behavior you are getting positive results for the company — that’s not acceptable in my opinion.”

The Commission said Microsoft had a 35-40 percent share of the work group server market in 1999 when the EU executive began to investigate the firm. Between 2001 and 2003 that grew to 60 percent and now Microsoft has 70 to 75 percent of the market.

Work group servers connect to Windows desktop computers, and the Commission found Microsoft products work far more smoothly than the servers of competitors, giving Microsoft an edge.

The edge exists only because Microsoft refuses to share information with competitors, the Commission has held.

The merits of Ms. Kroes’ argument aside, it doesn’t look like Microsoft’s “EU antitrust problem” is going away anytime soon.