Q & A: New Vision for Interactive TV Is Key to Adding Value

REDMOND, Wash., June 3, 2002 — Moshe Lichtman is no stranger to leading the charge with emerging businesses and technologies. An 11-year Microsoft veteran, Lichtman led the successful Plug and Play initiative to improve the design and usability of PCs and peripherals, and ran Microsoft’s wholly-owned subsidiary, Softimage, supervising the creation of industry-leading digital media creation tools. (Softimage was sold in 1998.) As the new vice president for the Microsoft TV Division, Lichtman has masterminded a new interactive TV (iTV) vision for the company and formulated a new approach to developing TV software.

The first part of Lichtman’s vision was unveiled in early May at the National Cable and Telecommunications Association (NCTA) Cable 2002 show in New Orleans. To provide a more compelling TV experience to the millions of digital set-top boxes already in consumers’ homes, Microsoft announced the new Microsoft TV IPG (Interactive Program Guide). Called
“fast and flexible”
and predicted to
“catch on quickly”
by Forrester Research (“Microsoft Busts the Program Guide Monopoly,” May 2002), the IPG solution makes it easier for viewers to find the shows they want, and answers cable operators’ demand for cost-effective, ready-to-deploy iTV software that delivers a superior TV viewer experience. Microsoft TV IPG enables cable companies to get started with basic iTV services today; increasing customer satisfaction and reducing digital churn, and provides a springboard for them to move to more advanced services over time.

PressPass recently spoke to Lichtman about this strategy and the future of iTV.

PressPass: What commitment has Microsoft made to the cable industry?

Lichtman: Early on, Microsoft recognized the promise of cable and the opportunity for software to help connect and bring to life the
“Cable Home.”
We have collaborated closely with the cable industry to make sure that our Microsoft Windows software for personal computers and MSN services provide a great broadband experience to consumers. We’ve also worked to create software for digital cable that is enabling a new level of TV services. We are committed to being the strongest partner possible and delivering the best software to help cable operators reach their broadband and digital TV goals.

PressPass: What has Microsoft learned about iTV over the past decade?

Lichtman: A lot! As the industry has changed over the past 10 years, we’ve followed the learning curve in step with cable. Cable companies are always looking for smart ways to leverage technology to build their businesses. As a result, cable has been subject to some of the volatile aspects of the Internet and broadband markets. At the same time, cable is affected by unique market factors — ranging from regulatory issues to financial and stock market pressures to legacy system infrastructures — which impact everything we do for the industry.

Our biggest lesson has been that we need to balance technology with the value proposition for cable companies and their customers. That’s really the philosophy behind our new vision and software development strategy, and you’ll hear a lot from us about value going forward. In today’s increasingly competitive marketplace, we see that cable companies have to be more thoughtful about strategic, long-term investments. That’s why we’ve envisioned and created a scalable product strategy that enables the industry to offer new, cost-effective experiences and services, both today and in the future.

PressPass: You’ve said Microsoft will focus on the value proposition for cable operators. What does that mean and how will Microsoft TV accomplish this?

Lichtman: Today’s market for cable operators is growing increasingly competitive as satellite companies look to offer advanced TV services like personal video recording (PVR) and enhanced TV shows, as well as to partner with DSL providers. We look to help cable operators by providing ways to offer new, cost-effective TV services now and into the future. For cable operators today, the primary focus is on video-based TV services that can be delivered on the set-top boxes they already have in their subscribers’ homes. At the same time, a growing segment of the marketplace is getting excited about a new class of high-end media distribution products that enable TV services to be delivered to multiple TVs in the home in a more cost effective way than today’s solution, which is to put a set-top box alongside every one of those TV sets. We call this the
“media center.”
For operators like Charter and others, the media center is the preferred solution for their highest-margin subscribers. These subscribers represent up to 20 percent of a network operator’s base and are the most likely to churn from cable to satellite due to the enhanced features and services offered by satellite TV operators today.

PressPass: In the past, Microsoft TV has focused on advanced iTV solutions. Why is the emphasis now on a thin client strategy?

Lichtman: Microsoft is directly responding to the needs of the industry. Today, cable companies are looking for ways to improve the digital TV experience and provide new services on their current equipment rather than upgrading across the board to more advanced set-top boxes, which can be costly and take a long time to deploy. Microsoft TV IPG is ready to deploy to current generation set-tops, doesn’t require a truck roll, and provides viewers with a more dynamic viewing experience. Simply put, we’ve built the proverbial better mousetrap. Future versions of IPG will support VOD, presenting even greater revenue opportunities from already installed set-top boxes.

Microsoft also is responding to cable companies that are seeking a high-end media center solution. Microsoft TV Advanced 2.0 already supports many of the requirements for these devices, and we have experience with high-end products through our work with UltimateTV in the United States and TV Cabo in Portugal, which offers its customers the world’s most advanced cable iTV system.

PressPass: What is the opportunity for a product like Microsoft TV IPG?

Lichtman: Microsoft TV IPG was designed for thin-client set-top boxes. Since the Motorola DCT-1000 was launched and became the world’s first mass-deployed digital set-top terminal, Motorola (formerly General Instrument) has shipped more than 20 million digital set-top boxes, including the DCT-2000, the world’s most widely deployed digital set-top terminal. While Microsoft TV IPG is available today for Motorola set-top boxes, it can be ported to additional original equipment manufacturer (OEM) devices, further increasing the market opportunity.

PressPass: Microsoft has a history of supporting developers for both content and applications. How is Microsoft TV carrying on this tradition?

Lichtman: Microsoft TV has a program dedicated specifically to the developer community. The Microsoft TV Developer Program provides the most advanced iTV learning and support in the industry. Since the new program was unveiled last January, some 1,500 companies from more than 90 countries, and representing a wide range of industries, have joined the program. Through our developer program, companies can create solutions that will run on the Microsoft TV platform, and we expect that the number of participating companies will continue to grow as iTV becomes more popular and more widely deployed.

PressPass: How does Microsoft TV fit into other Microsoft strategies, such as .NET?

Lichtman: The Microsoft.NET strategy makes the Internet more powerful as a platform for content and services, across devices, across users and across services. Microsoft TV will enable the delivery of .NET services to the television. .NET can help cable in two ways. First, .NET services can help cable providers save money on their backend operations. They can enable flexibility in exchanging data with vendors, and improve data collection and warehousing across disparate systems, enabling better business management and marketing planning. Second, .NET services can help cable providers make money by enabling them to provide compelling new subscriber services. Many of these services can be provided on a subscription basis or as part of a premium bundle. What’s more, these services will enable additional revenue-generating opportunities. And .NET isn’t just a
“Microsoft thing.”
Cable companies and their partners can create their own .NET services to work with Microsoft TV as well.

PressPass: What can we expect in the future from iTV?

Lichtman: iTV is still in its infancy. There are more than 1.5 billion TV sets in the world, and fewer than five percent of them have iTV services available today. In the short term, you can expect to see innovative operators provide more and more compelling services on today’s set-top boxes. And as broadband becomes more widely deployed and networked homes become a reality, iTV will grow more advanced, providing a much more personal and richer experience for consumers. We believe that using a PVR will soon be more common than using a VCR. As this occurs, more compelling content will be developed, making the TV a primary source for information and as well as entertainment.

Related Posts