31 May 2000

In its first success in Europe’s interactive TV market, Microsoft has secured a toehold via TV Cabo, a subsidiary of Portugal Telecom. Although MS owns a controlling or strategic stake in a number of European TV companies, until now none has committed to use its interactive software. Microsoft paid $38.6m for a 2.5% equity stake in TV Cabo in March of last year.

TV Cabo, Portugal's leading cable company, plans to use the software both to drive its TV servers and the set-top boxes viewers need to receive digital services. The network hopes to sign one million interactive TV subscribers by 2005 and will commence roll-out of its services via high speed cable lines in the first quarter of next year. Its set-top boxes will also double as digital video recorders; and the company plans to offer video-on-demand, e-commerce and online-banking services.

Microsoft is far from having things all its own way in the European TV market. Digital TV technology developed by French broadcaster Canal Plus and OpenTV of California is already in use in seven million European homes, and Forrester Research forecasts that 80 million Euro-households will be watching interactive digital TV by 2005.

TV Cabo's choice of the Microsoft TV software platform will not go down well in Brussels, where the European Commission is investigating whether the US giant is unfairly using its financial muscle to gain advantage in the interactive TV market [WAMN, 26-May-00].

News source: Wall Street Journal