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Microsoft to Announce Video-Production Deals for MSN Online

Posted on: Wednesday, 3 May 2006, 18:00 CDT

By John Boudreau

HOLLYWOOD -- The world's largest software maker is going Hollywood.

Microsoft will announce today a series of deals with independent production companies to produce video for MSN online.

The first two partnerships are with Reveille, creator of TV shows such as NBC's "The Office" and "The Biggest Loser," and Be Jane, which produces home-improvement videos for women. Microsoft expects to ink more agreements with different production companies in coming months.

The made-for-Internet shows further the quick evolution of the Internet as an entertainment force that is changing the viewing habits of Americans. Previously, Hollywood viewed the Internet as a way to cash in on material originally created for television or movie theaters. But deep-pocketed technology companies, which need compelling content to attract more eyeballs to their Web sites, could follow Microsoft's path and financially back the expensive process of creating original Internet video, said Ben Bajarin, an analyst with Creative Strategies.

"If anyone can make it pay off, it will be Microsoft," he said. "Look at the relatively unlimited resources they have."

Yahoo, which hired Lloyd Braun, the former head of ABC entertainment, to set up a studio in Santa Monica, has experienced limited success with its original programs. Those programs include roving foreign correspondent Kevin Sites and Richard Bangs' adventurous travel program. The company just launched a consumer tech site, Yahoo Tech, which will include a video segment. Google, on the other hand, has so far focused on distributing the work of others.

Ira Kurgan, chief business officer of Yahoo's media group, said the Internet company has had numerous discussions with production studios about possible partnerships. He is familiar with Ben Silverman, Reveille's chief executive. "He's a quality producer. We hope to work with him as well."

Unlike Yahoo, Microsoft is choosing to hire filmmakers to produce original content for its site. The first shows are expected to "air" online this summer, said Rob Bennett, general manager of MSN Entertainment and Video Services.

"We are not going to build a 25,000-square-foot studio in Santa Monica," Bennett said, referring to Yahoo's Southern California entertainment operation. "No one is going to give me a camera and say shoot stuff. We want to partner with the entertainment industry."

"We are entering a transition" in which entertainment companies will produce video exclusively for distribution through the Web, Bennett added. Initially, at least, the deal is for one year, though he said the company expects it will be a relationship that extends for years.

Microsoft and Reveille have mapped out production of four projects that, if popular, could later be offered to networks as regular TV shows. "If a show has a dedicated fan base with advertisers on board, we could take that to the networks," he said.

Under the agreement, MSN has the first-look option for all Internet content Reveille develops. Microsoft is creating a production fund of several million dollars to be used by Reveille to create pilots and other entertainment programming. MSN hopes to build an interactive component around the material, including allowing viewers to create their own endings to a show or make plot suggestions, Bennett said. Eventually, the content could be made available through mobile phones.

Microsoft's strategy faces obstacles, though, namely how to market its content. Networks can provide promotional ads for its shows and studios display trailers at movie theaters, Bajarin observed. But Internet sites don't have such avenues.

Contact John Boudreau at jboudreau@mercurynews.com or (408) 278-3496.

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