Microsoft Launches Chinese Media Venture
Microsoft Corp. and a major Chinese TV set maker announced Monday they will
jointly develop entertainment products linking television and the Internet,
joining a race to profit from the Web's growing status as a channel to distribute
movies and other programs.
As a part of the deal, Microsoft will become a strategic investor in Changhong,
buying just under 1 percent of its shares for about $12 million, Changhong said
in a prepared statement.
Microsoft and Sichuan Changhong Electric Co. will explore "a wide range
of scenarios for digital entertainment needs," said Roger Chen, a Microsoft
spokesman in Beijing.
The types of equipment, software and other products that might be developed,
in which countries they might be sold and other details are still under discussion,
"The project focuses on in-home network digital entertainment -- how to
connect PCs, TVs and the Internet to provide this digital entertainment experience,"
The Internet is emerging as a key channel for piping movies and other programming
into homes. Sony Corp., Apple Inc. and other media and electronics companies
have announced plans for devices to allow programs downloaded from the Web to
be viewed on high-definition TV sets, rather than on computers.
Microsoft's decision to turn to China for a development partner reflects the
country's status as a major television and Internet market and a leading producer
of consumer electronics.
China has the world's second-largest population of Internet users after the
United States, with 137 million people online. Its population of television
viewers is already the world's biggest at 400 million.
Spokespeople for Changhong, based in the southwestern city of Chengdu, refused
to give any other information other than the prepared statement.
Redmond, Washington-based Microsoft and Changhong have been jointly exploring
China's Internet media market since 2004, according to Chen.
"Definitely China is a very important strategic market for Microsoft and
on digital entertainment, a major potential market," he said.
Chen said he had no details on whether Microsoft was pursuing similar Internet-media
development with local partners in other countries.
In the United States, DVD rental company Netflix Inc. said in January it would
distribute movies and TV programs over the Internet.
In China, foreign media companies have turned to Web distribution to avoid
government rules that restrict the amount of foreign programming on Chinese
television and its content.
Viacom Inc.'s MTV Networks launched a venture with Chinese search engine Baidu.com
Inc. in October to distribute music videos and other material online. Chinese
regulators have limited MTV's presence in China to cable systems in a portion
of the country's south and syndication deals with some local broadcasters.