Microsoft has shelved discussions aimed at creating an online subscription service for TV shows and movies, according to people familiar with the talks with media companies.
The technology giant had been in intense talks with potential partners for over a year and was hoping to roll out the service in the next few months, but has walked away from negotiations after deciding that the licensing costs were too high for Microsoft’s business model.
“They built Microsoft TV, they demoed it for us, they asked for rate cards but then said ‘ooh ah, that’s expensive’,” said one senior media executive involved in the talks.
A representative for Microsoft declined to comment.
Early versions of Microsoft’s TV service included a range of advanced features such as being able to change channels with voice and motion control.
Similar to Netflix, which launched in the UK earlier this week, Microsoft’s service could also have allowed users the option of paying a monthly fee for a package of programming from someone other than a local cable or satellite TV company.
Unlike Netflix, Microsoft had hoped to offer current shows and live networks on its service, which made it a much higher cost proposition.
Microsoft is still working closely with the TV business to distribute shows over the web, but rather than playing a role in helping consumers replace their paid-for TV packages it is focusing on delivering programming via its Xbox gaming system to existing subscribers of other content suppliers.
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