Microsoft has quietly added TV shows to the Zune store in the UK, France, Germany, Italy, Spain, Japan, Australia and Mexico. Content can be purchased as both single episodes and bundles on a digital retail (EST) basis. The offer typically focuses on content from US broadcasters including NBC, Fox, The CW and AMC; although shows from major local players line the BBC are also available. Our research suggests that the library is generally made up of older content.
Prices are in Microsoft points and vary by region with a single episode in standard definition (SD) costing between 190-230 point and between around 240-300 points in high definition (HD). Single episode prices appear to be fairly standard within a single region. Bundle pricing, however varies within a given territory; a quick survey by IHS revealed prices in the UK ranging for an HD series from 2,000 (equivalent to £16.18) points to 4,420 points (equivalent to £35.76).
The level of publicity that TV shows have been given varies considerably by market with Japan and Australia seeing some promotion on their respective national versions of the Xbox site; whereas very little seems to have been made of the lunch in the UK.
We will be updating our forecasts to reflect these launches over the next few weeks.
In the near term the soft launch of TV shows in the Zune store is a quiet but significant addition to Microsoft's content offer and should boost consumption through the Zune store - digital retail TV shows continue to be a substantial business for Apple, while Sony's online store launched TV shows in the major European markets and Australia in Q4 2011. However, the bigger strategic role for TV shows from Microsoft's online store comes later in the year with the launch of Windows 8 across PCs, tablet and phones. Adding TV content helps to fill out the content offer from Microsoft's broad family of devices outside North America as the company (and its partners) compete with ecosystems from Apple and Google. In this broader context having a full content portfolio has become something of a strategic priority for both Google and Microsoft as they compete with Apple's content-plus-hardware offer. All major international players now offer apps, music, movies, TV shows and books, although there is considerable variation in the deployment of each, for example: Microsoft has approached publishing through a joint venture with Barnes & Nobel rather than looking after them in-house where others have done direct deals with publishers; Google currently only offers TV shows in the US (although this seems likely to change), while others offer TV in a number of other markets. Nevertheless it is not clear how well the approach of developing direct content relationships scales for smaller international markets. For the major platform owners aggregating local book, TV and music is a time consuming business that offers diminishing returns when compared to letting local players leverage your app store and taking a cut from transactions conducted using your platform. As a result it may well turn out that after the current wave of expansion into the major markets is over this sort of directly aggregated TV launch from a major international platform operator becomes far less common.