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August 4, 2006

Zune dropping video from first release?

Posted by David Hunter at 11:30 AM ET.

Tim Arango at the NY Post:

As Microsoft considers how to wage its upcoming war against Apple and its all-powerful iPod, the tech giant may run into unlikely enemies: the broadcast and cable networks it needs to supply music and videos.

Just last week, as licensing deals were close to being signed, Microsoft called up some content providers and said the video portion of its Zune device – the company’s so-called iPod killer – was being delayed, sources said.

I’ll spare you the inevitable Vista jokes.

At the same time, Microsoft indicated to entertainment industry executives that it may push to give away downloads but rake advertising cash from its planned site instead of the pay-per-episode model iTunes uses, according to an executive close to the negotiations.

This is video, not music, but it opens up a whole new realm of negotiation since it would effectively put the studios in competition with Microsoft for advertising sales on their product.

Meanwhile, The Post has learned, earlier this year Microsoft’s MSN unit – which operates separately from the division that is working on Zune – was in discussions with several networks about deals in which Microsoft would sell advertising and the shows would be available for download for free.

In the end, the content providers bailed because of worries about competing with Microsoft for advertising.

Last week, a remnant of those plans was announced when MSN and Fox said that the hit show “Arrested Development” would be available online for free. (Fox and The Post are both owned by News Corp.)

Undoubtedly more excitement is yet to come.

Update: Microsoft termed the Post report “speculative.”

Filed under Advertising, Argo, General Business, MSN, MSN Video, Microsoft, Online Services, Zune

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One Response to “Zune dropping video from first release?”

  1. Zune video confirmed -- Microsoft News Tracker Says:

    [...] Earlier in the month there was a rumor that the video portion of Microsoft’s Zune personal media player would be delayed. Today, Microsoft’s Richard Winn reports on the audio and video content that will be preloaded on the Zune, so I guess that rumor can be laid to rest. Also, Microsoft’s Cesar Menedez points to more preloaded Zune content. Filed under Microsoft, Argo, Zune   [Permalink] [TrackBack] [...]

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