Microsoft next week plans to reveal hints of its original video programming for the Xbox. The company faces big challenges to stand out in a very crowded field.
Microsoft is producing TV-like series in an effort to broaden the appeal of the console beyond videogame devotees. Shows will include a reality-style series about soccer and a documentary about a landfill with discarded Atari games.
Unoriginal Originals
A growing number of Web companies are pushing into original TV-like programming to help them stand out. Microsoft's Xbox videogame console in coming weeks will join the crowded field. A sampling:
NETFLIX: At the cost of about $100 million over two years, the political thriller 'House of Cards,' shown above, has generated buzz for Netflix, which doesn't disclose ratings.
AMAZON: Amazon has had a spotty track record with original shows like 'Alpha House,' but made a big splash recently by landing HBO's first deal with an online-video provider.
HULU: 'A Day in the Life' from documentary film maker Morgan Spurlock and 'Endgame,' about a chess playing crime solver, are among the exclusives bought by Hulu.
YAHOO: The struggling Web firm is on the cusp of ordering multiple half-hour comedy series, following prior stabs at original shows like 'Electric City,' an animated series from Tom Hanks.
But 19 months after Microsoft hired veteran television executive Nancy Tellem to start a mini-Hollywood production arm, original programming has become unoriginal.
Netflix, Amazon.com, Hulu and Yahoo each now produce their own shows. Some, like Netflix's "House of Cards," have won critical acclaim. Google's YouTube and Sony's PlayStation also are signing up exclusive programming. The glut threatens to blunt the appeal of Xbox's entertainment lineup.
"It's increasingly tough for Xbox or anybody else to stand out in the surge of Web and TV companies investing in original programming," said Michael Nathanson, a media-industry analyst at research firm MoffettNathanson LLC.
Moreover, Microsoft hasn't made clear the strategy behind original programming, or its business model. Microsoft hasn't said if it will make the programming available free, include it as part of its Xbox Live package, or charge an additional subscription fee.
It enters the fray with some advantages. More than 80 million Xbox devices have been sold. At $5 a month, Xbox Live, which offers sports programming from ESPN and the ability to use video-calling service Skype from a TV, is cheaper than rival services.
But the Xbox is also costly, about $500 for the newest model. Programming from Hulu, Netflix and Amazon can be viewed on personal computers or a variety of devices that cost less than $100.
Microsoft lured Ms. Tellem from CBS Corp. in September 2012 to bolster the Xbox's standing as a hub for home entertainment. She hired more than 150 people, including dozens to court veteran makers of movies and TV shows to create programming for the Xbox. Ms. Tellem several times pushed back the planned time frame to launch the first batch of programs.
Ms. Tellem recently told Bloomberg News the first of more than a dozen planned shows will appear in June. The programming includes an expected series from director Steven Spielberg based on the videogame "Halo," and a version of Swedish sci-fi show "Humans."
She has faced internal turmoil. The Microsoft executives who brought in Ms. Tellem, CEO Steve Ballmer and Xbox chief Don Mattrick, have left. The Xbox unit has had three leaders in less than a year. Several Xbox executives have left recently, for jobs at online-game firm Zynga Inc. and speaker company Sonos Inc., among others.
Microsoft declined to make Ms. Tellem or other Xbox executives available for interviews.
Hollywood officials who have spoken with Xbox executives say Ms. Tellem's group plans initially to focus on the device's prime demographic of young men. Subsequent offerings will try to appeal to a wider audience. They've described two types of programming: cable-like scripted shows and bite-sized fare like sketch comedy pieces.
Analysts question whether Microsoft is willing to devote the money and attention to compete with Netflix, Amazon and others. Richard Greenfield, an analyst with research firm BTIG, says few people know the Xbox has original programming. "If Microsoft wants to devote the dollars to create unbelievable, awesome content, they can do it," he said. "They just have to spend the money and have the focus."
The price is rising as the new entrants drive up the costs of producing original programming. Bernstein Research estimates Amazon will spend about $2 billion this year to buy programming rights for streaming video, up from roughly $1.2 billion in 2013. Netflix says it expects nearly $3 billion in Web-video acquisition costs this year. Microsoft hasn't detailed its financial commitments to the Xbox Entertainment Studio.
For Hollywood, the Web players' war is a bonanza. "We're selling to a bunch of buyers that didn't exist when we were founded" two years ago, said Mike Tollin, an executive producer on "Every Street United" a soccer documentary-style series for Xbox, set to debut around June's World Cup.
Microsoft certainly has the resources, including more than $88 billion in cash. But new Microsoft CEO Satya Nadella has been stressing the need to focus Microsoft on what it does best. Mr. Nadella has scarcely mentioned Xbox publicly in his first three months on the job.
"If I were Sayta, I would be saying, 'Why are we doing this?" said Rick Sherlund, a longtime Microsoft analyst at Nomura Securities. "Do you really want to double down on content?"
Ms. Tellem also will have to win over people like Derik Linch. The Xbox owner in Westminster, Colo., said he's not sure exclusive programming is enough to make the Xbox a must-buy item, as it was in high school when he and friends played "Halo."
"I'm a little hesitant," Mr. Linch said. "It seems like a trendy fad thing for these tech companies to make original shows."
