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Microsoft, Changhong to develop home entertainment

Microsoft Corp and a major Chinese TV set maker announced yesterday they will jointly develop entertainment products linking television and the Internet, joining a race to profit from the Web's growing status as a channel to distribute movies and other programs.

Microsoft and Sichuan Chang-hong Electric Co (四川長虹電器) will explore "a wide range of scenarios for digital entertainment needs," said Roger Chen (陳然峰), a Microsoft spokesman in Beijing.

The types of equipment, software and other products that might be developed, in which countries they might be sold and other details are still under discussion, Chen said.

"The project focuses on in-home network digital entertainment -- how to connect PCs, TVs and the Internet to provide this digital entertainment experience," he said.

strategic investor

As a part of their deal, Microsoft will become a strategic investor in Changhong, buying just under 1 percent of its shares for about 94 million yuan (US$12 million), Changhong said in a statement.

The Internet is emerging as a key channel for piping movies and other programming into homes. Sony Corp, Apple Inc and other media and electronics companies have announced plans for devices to allow programs downloaded from the Web to be viewed on high-definition TV sets, rather than on computers.

Microsoft's decision to turn to China for a development partner reflects the country's status as a major TV and Internet market and a leading producer of consumer electronics.

China has the world's second-largest population of Internet users after the US, with 137 million people online. Its population of TV viewers is already the world's biggest at 400 million.

Redmond, Washington-based Microsoft and Changhong have been jointly exploring China's Internet media market since 2004, Chen said.

He added that China is definitely "a very important strategic market for Microsoft and on digital entertainment, a major potential market."

other deals?

Chen said he had no details on whether Microsoft was pursuing similar Internet-media development with local partners in other countries.

In the US, DVD rental company Netflix Inc said in January it would distribute movies and TV programs over the Internet.

In China, foreign media companies have turned to Web distribution to avoid government rules that restrict the amount of foreign programming on Chinese TV and its content.
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