Bloomberg News

Microsoft to Develop More TV Programs as It Readies Xbox One

September 17, 2013

Xbox One

Attendees look at the Microsoft Corp. Xbox One video game console during the E3 Electronic Entertainment Expo in Los Angeles. Photographer: Patrick Fallon/Bloomberg

Microsoft Corp. (MSFT:US) said it will expand its TV programming beyond the show based on its best-selling “Halo” game as it tries to position the new Xbox One console as a portal for games, videos and music.

Phil Spencer, corporate vice president at Microsoft Studios, declined to elaborate in an interview in Tokyo today before the Tokyo Game Show. Microsoft is returning to the show this year as it competes against Sony Corp. (6758)’s new PlayStation 4 console and online games in a $63 billion industry.

Xbox One is an attempt to merge TV watching with video game playing as Microsoft teams with partners including the National Football League to offer features such as viewing highlights and game scores. To underscore that broader approach, Microsoft is producing a live-action “Halo” show, in which director Steven Spielberg will be involved, and has a production team in Los Angeles developing concepts.

“They have literally hundreds of ideas that they are incubating right now,” Spencer said. “We will have some new announcement for TV shows coming pretty soon.”

Microsoft and Sony are betting that faster machines allowing for features such as motion capture and immersive graphics will lure consumers whose tastes are shifting toward mobile games played on tablets and smartphones. The Redmond, Washington-based company, which is buying Nokia Oyj (NOK1V)’s handset unit, is strengthening a push into hardware as demand weakens for programs such as Windows that made it the world’s largest software maker.

Improved Kinect

The Xbox One will be released in the U.S. on Nov. 22 with a price of $499. The company’s first new console in almost eight years uses voice commands and motion sensing to recognize users and let them shift between games, live TV and Skype through an improved Kinect device that will come with the machine.

Spencer said sports programming will be an important element of the new console.

“We believe sports is a very interesting category globally,” he said. “We’ll be expanding what we do in sports to bring more international sports into the mix. ”

Microsoft, the top U.S. seller of consoles for more than two years, will debut the Xbox One a week later than the $399 PS4, which hits American stores on Nov. 15. Nintendo Co. (7974) last month cut the price of the Wii U by $50 to $299 after the console, introduced last year, missed company sales targets.

Microsoft will release the Xbox One in 13 countries on the same day, giving it a week’s head start in Europe, where the PS4 starts selling Nov. 29. Sony will reach stores in 32 markets this year.

Smartphone Competition

The PS4, Sony’s first new console in seven years, and Microsoft’s Xbox One are each projected to sell 3 million units worldwide this year, according to the estimate of Michael Olson, an analyst with Piper Jaffray Cos. in Minneapolis. By comparison, smartphone shipments in the second quarter alone totaled 229.6 million, according to researcher Strategy Analytics.

U.S. retail sales of new video-game software fell 15 percent to $2.15 billion in the first half, to make up 33 percent of consumer spending on games, according to researcher NPD Group. Digital-format sales, including online subscriptions and downloads, mobile and social titles, rose 10 percent.

Microsoft, which initially targeted 21 countries for its debut, last month cut the number to 13 to ensure larger markets have sufficient supplies.

The company unveiled the new console in June and within weeks dropped curbs on trading games and the need for regular Internet connections after losing an initial face-off with the PS4.

To contact the reporters on this story: Takashi Amano in Tokyo at tamano6@bloomberg.net; Grace Huang in Tokyo at xhuang66@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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