Why Microsoft Corporation Wants to Be a TV Mogul

Three Fools take to the Internet to examine the reasons behind Microsoft Corporation’s big investment in Xbox Originals.

May 3, 2014 at 4:00PM

Xbox Originals Logo

Earlier this week, Microsoft announced a massive lineup of exclusive original documentaries and TV series for Xbox owners.

When Microsoft Corporation (NASDAQ:MSFT) announced plans to back more than a dozen new original programs and documentaries via its Xbox Live network, it raised questions about Mr. Softy's long-term strategy. Are the days of Microsoft's obsession over the mechanics of the PC market finally over?

Host Ellen Bowman puts this question to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Nathan says it's an ambitious slate that rivals what Hulu and Netflix already have. What's clear is that the effort isn't, by itself, aimed at winning more buyers of Xbox devices since Microsoft makes little profit on each console sold.

Instead, Nathan says, the bet may be that the Xbox and its associated original programming will get customers more interested in associated products, such as Windows Phone and Skype communications. All three products exist within the confines of the Entertainment and Devices Group, which sports the lowest profit margins among all of Microsoft's six reporting segments.

Tim notes the programming announcements come as networks and other would-be TV moguls were participating in "upfronts" -- presentations to Madison Avenue executives aimed at selling time slots for ad-supported television shows. We've no indication of Microsoft plans to include ads with its originals, but Tim says the timing is interesting and the strategy wouldn't be unprecedented. Hulu places ads in its much of its programming, and earns a premium per subscriber as a result.

Either way, Tim and Nathan say investors would do well to keep a close eye on results in the Entertainment and Devices division in succeeding quarters. If margins expand as revenue grows, we'll know that Microsoft's strategy is working.

Now it's your turn to weigh in using the comments box below. Do you like Microsoft's plan to fund a slew of Xbox Originals? Why or why not? Click the video to watch as Ellen puts Nathan and Tim on the spot, and then be sure to follow us on Twitter for more segments and regular geek news updates!

Ellen Bowman and Tim Beyers own shares of NetflixNathan Alderman didn't own shares in any of the companies mentioned in this article at the time of publication. The Motley Fool recommends Netflix and Yahoo! and owns shares of Microsoft and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers