Despite Microsoft's (NASDAQ:MSFT) hugely successful emphasis on the enterprise lately under CEO Satya Nadella, the software giant still isn't ready to concede the consumer services space to Apple (NASDAQ:AAPL) quite yet. For example, the company announced last month that it was revamping its news offerings, leveraging its decades of experience in that industry. That news news came just as Apple is expanding its own news operations, bringing Apple News to more of its apps and operating systems.
With Apple undoubtedly building its own video-streaming service, it sounds like Microsoft wants to retain relevance there now, too.
Embracing other platforms
Windows Central reports that Microsoft is working to bring its existing Movies & TV app to other platforms beyond Windows. Movies & TV has thus far only been available on Windows platforms but may soon come to iOS and Android. Microsoft hopes to appeal to more consumers by giving them greater flexibility in accessing purchased content, which could encourage more transactions.
However, Microsoft still relies heavily on the a la carte purchase model when it comes to entertainment content, at a time when subscription-based streaming is the way to go. That broader trend is likely the impetus for Apple moving toward subscription-based streaming, as the Mac maker has also been losing share in the market for purchased downloads. For what it's worth, Apple says that in absolute terms, purchases and rentals are at the highest level in over a decade.
Given Microsoft's nonexistent presence in mobile these days, it's a no-brainer to bring Movies & TV to iOS and Android. With Microsoft bailing on music streaming altogether last year, perhaps the company is trying to salvage its video download business. It's worth noting that embracing cross-platform strategies has been a hallmark of Nadella's tenure as CEO.
Microsoft will still probably lose relevance in mobile video
The bigger challenges will be brand perception and consumer behavior. Mobile users are accustomed to buying pretty much all digital content from Google Play, iTunes, and the App Store, as those repositories are one-stop shops. Why would they only buy video content from Microsoft but apps and other content from Apple and Alphabet subsidiary Google, when they can get everything they need from the primary platform storefront?
Ultimately, this could prove to be a futile last-ditch effort by Microsoft to save what it has left of its video download business. There's virtually no chance that Microsoft would build a subscription-based video-streaming service, as it would require billions of dollars to invest in original content, which is the primary differentiator of such services.
To be clear, Microsoft undoubtedly has that kind of money, but probably recognizes the risk that those dollars would be wasted, given its poor track record with consumer services.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends GOOGL, GOOG, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.