Microsoft invests in a multimedia future

Microsoft is moving into multimedia. Despite the fact that advertising returns are unimpressive, the Internet is proving an attractive investment to a range of companies because of its immeasurable potential.

The news that Microsoft is developing an on-line listings service, under the working title Cityscape, comes as no surprise to those who have been following the company’s fortunes recently. The world’s largest software company has been trying very hard to look like a major media player.

Cityscape will be an arts and entertainment listings service, covering the US and major cities around the world. When the service is running, users will be able to book tickets for the shows and galleries they have just read reviews about. The company is currently looking for a managing publisher and an editor to run the London side of the operation. The service is scheduled to start at the end of the summer.

But this is just one of a number of ventures the company has thrown itself into in the past six months. Most of them are linked to Microsoft’s embrace of the Internet last December. Its Website, Microsoft Network (MSN), after a failed attempt to challenge closed Net systems like CompuServe and America Online, is now regarded as one of the best open access Web sites on the Net. Microsoft already publishes Slate, an upmarket on-line magazine.

Then there is its link with Hollywood’s newest studio, DreamWorks, last summer. Microsoft has invested 20m in a one per cent stake in the studio.

And on July 15 Microsoft and US TV channel NBC will launch MSNBC, a joint cable and Web channel, in 22 million US homes. Both companies have pledged to spend 315m on the project over the next five years. A similar service is to launch in an estimated 9 million homes across Europe in the autumn.

What this adds up to is a software company that wants to diversify, and like everything Microsoft does, it wants to do it quickly. The company has used the Internet as its route into multimedia pub lishing for virtually all of these new ventures.

As Tom Lucemore, Internet editor for technology magazine Wired, says: “This is a company that likes to move fast. It has a lot of resources at its disposal and when it decides on something it doesn’t go about it half-heartedly. Currently Microsoft is intent on changing itself into a multimedia company.”

Craig Waller, managing director of Premier Online, which puts the magazines of companies like British Airways on the Net, says Microsoft has realised “the future on the Net lies in creative editorial and not in providing technical know-how”.

Microsoft chief executive Bill Gates, a man who takes risks but never without weighing up all the options, realises this. He has stated that computer software will remain Microsoft’s core business. But in almost the same breath he pronounced: “Content is where I expect much of the real money to be made on the Internet, just as it was in broadcasting.”

Analysts believe that while the core of Microsoft’s business will remain in software, increasingly significant amounts of time and money will be directed toward new media publishing. Down that road lies the potential to make millions, and the certainty of glamour. Why else, say observers, would Microsoft get involved with the lottery of Hollywood studio production?

Katherine Jackson, Price Waterhouse’s assistant corporate fin ance director for entertainment, media and communications, says: “Microsoft is looking to expand all the time and wants to dominate electronic media and the Net.”

But what nobody seems to know is where the money will come from?

Even companies which have invested millions in technology and staff to set up Net services are not quite sure. CNN have had three news Websites since last summer, by the end of this year they say they will turn over 750,000 profit from advertising on these channels. Although it is encouraging to see that these sites can make money, this figure is loose change for CNN founder Ted Turner.

Microsoft estimates that the World Wide Web has attracted about 18m in total ad revenue, which can be put in perspective when you consider that Procter & Gamble spent 106m in the UK alone last year.

As Jackson explains: “It is important to get your brand on the system because at the moment everything is up for grabs. Older news companies feel they have to protect their position and get on the Net, and newer IT companies see it as a natural way to expand. The revenue is small and the investment is sizeable, but they cannot afford not to get involved because of how big it could be.”

“It’s like being at Disney at the dawn of animation,” says MSNBC director Dewey Reid. But what everybody is wondering is when this ugly duckling is going to turn into a swan.

Bill Gates will be the star attraction at a Marketing Society Conference on November 20 at the Grosvenor House Hotel. The IT head, who was recently voted the second most powerful man in America, will take part in a filmed interview which will be shown exclusively at the conference a few days later.

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