Free Access Directly Challenges RealNetworks, AOL, Yahoo!

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NEW YORK ( -- In a head-on challenge to the online video operations of RealNetworks, America Online and Yahoo!, Microsoft Corp. plans to launch a free advertising-supported
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streaming-video service of television news content on MSN this winter.

The streaming-video news offered by RealNetworks' RealOne, Yahoo!'s Platinum and AOL for Broadband services are only available through paid subscriptions. The MSN plan will offer anyone daily free access to streaming news video from TV properties including NBC Nightly News, Today, Dateline NBC, Meet the Press and CNBC.

'A lot of homework'
"When we looked at this category, we did a lot of homework on people who are charging [for streaming-video content]," said President Scott Moore. "We came to the conclusion that 56 million people are streaming video on a monthly basis and less than a million people in the aggregate are paying for it. Rolling out a subscription product didn't seem like the best strategy."

The MSN ad-supported strategy was developed in conjunction with Publicis Groupe's Starcom MediaVest Group. The plan calls for the sale of 15 seconds of commercial video time for every five to six minutes of streaming-video news content. Static ad space within the MSN Video onscreen player will also be sold to marketers.

By clicking on a video link, a broadband user lands on a Web page where a video window appears. A 15-second TV ad runs and then a large, rich-media ad banner appears next to the streaming ad. The format is designed to wed the impact of TV advertising with the immediacy of the Web.

'Much more significant'
"We believe broadband is going to be much more significant than people thought it was going to be," said Rishad Tobaccowala, president of SMG's Internet practice. "We went through several revisions of the product. ... We wanted to ensure that consumers would be exposed to non-intrusive advertising that respects their time."

Mr. Tobaccowala said at least two advertisers had tested the format, although he declined to name them.

A report from MSNBC cable news on a medical breakthrough might be six minutes long, in two parts, but will feature just one ad that will come in at the halfway point. "It won't come in at the end, you will have to see the ad," Mr. Moore said. A user can pause the ad, but won't be able to fast forward or stop it.

The streaming-video ad format is unique, Mr. Tobaccowala said, because of the video-within-video aspect. "It used to be that video content would run in a static content environment, you'd be surfing and then video would start up on you," he said. Mr. Tobaccowala added that the format also allows advertisers to run additional messages, with the rich-media adjunct offering the ability to click through to a Web site and conduct an e-commerce transaction.

Joanne Bradford, MSN's chief revenue officer, said she and her ad sales team are speaking with a few advertisers about the new premium ad product. Presentations to advertisers and agencies begin full tilt later this month. MSN will debut MSN Premium and Plus services with an array of new features this winter.

"The MSN Video Service is a free product that will be on all of our properties on MSN Plus, Premium and on our portal," Ms. Bradford said. As a sales tool, she said the format offers MSN the chance to partner with fashion and shelter magazine content providers that have TV brands as well. "Fashion advertisers want to be in context with things that their potential buyers care about," she said.

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