MSN TV (formerly WebTV) was a web access product consisting of a thin clientdevice that used a television for display (instead of using a computer monitor), andthe online service that supported it. The original WebTV device design and servicewere developed by WebTV Networks, Inc., a company started in 1995. TheWebTV product was announced in July 1996 and later released on September 18,1996. In April 1997, the company was purchased by Microsoft Corporation and inJuly 2001, was rebranded to MSN TV and absorbed into MSN.
While most thin clients developed in the mid-1990s were positioned as disklessworkstations for corporate intranets, WebTV was positioned as a consumerproduct, primarily targeting those looking for a low-cost alternative to a computerfor Internet access. The WebTV and MSN TV devices allowed a television set to beconnected to the Internet, mainly for web browsing and e-mail. The WebTV/MSNTV service, however, also offered its own exclusive services such as a "walledgarden" newsgroup service, news and weather reports, storage for user bookmarks(Favorites), IRC (and for a time, MSN Chat) chatrooms, a Page Builder service thatlet WebTV users create and host webpages that could later be shared to others via alink if desired, the ability to play background music from a predefined list of songswhile surfing the web, dedicated sections for aggregated content covering varioustopics (entertainment, romance, stocks, etc.), and a few years after Microsoftbought out WebTV, integration with MSN Messenger and Hotmail. The setupincluded a thin client in the form of a set-top box, a remote, a network connectionusing dial-up, or with the introduction of Rogers Interactive TV and the MSN TV2, the option to use broadband, and a wireless keyboard, which was sold optionallyup until the 2000s.
The MSN TV service lasted for 18 years, shutting down on September 30, 2013,and allowing subscribers to migrate their data well before that date arrived.
The original WebTV network relied on a Solaris backend network[1] and telephonelines to deliver service to customers via dial-up, with "frontend servers" that talkdirectly to boxes using a custom protocol, the WebTV Protocol (WTVP), toauthenticate users and deliver content to boxes. For the MSN TV 2, however, acompletely new service based on IIS servers and regular HTTP/HTTPS services.
I've been working to create an interactive television my entire life. I always knew it was a way of bringing computers toaverage people.— Steve Perlman[2]
Co-founder Steve Perlman is credited with the idea for the device. He first combined computer and television as a high-school studentwhen he decided his home PC needed a graphics display. He went on to build software for companies such as Apple and Atari. Whileworking at General Magic, the idea of bringing TVs and computers together resurfaced.
One night, Perlman was browsing the web and came across a Campbell's soup website with recipes. He thought that the people whomight be interested in what the site had to offer were not using the web.
A Silicon Valley startup, WebTV Networks was founded in July 1995. Perlman brought along co-founders Bruce Leak and PhilGoldman shortly after conceiving the basic concept.[3] The company operated out of half of a former BMW car dealership building onAlma Street in Palo Alto, California, which was being used for storage by the Museum of American Heritage. WebTV had been ableto obtain the space for very low rent, but it was suboptimal for technology development.[3]
Before incorporation, the company referred to itself as Artemis Research to disguise the nature of its business. The info page of itsoriginal website[5] explained that it was studying "sleep deprivation, poor diet and no social life for extended periods on humans anddwarf rabbits". The dwarf rabbit reference was an inside joke among WebTV's engineers – Phil Goldman's pet house rabbit Bowser(inspiration for the General Magic logo) was often found roaming the WebTV building late into the night while the engineers wereworking—although WebTV actually received inquiries from real research groups conducting similar studies and seeking to exchangedata.[3][6]
The company hired many engineers and a few business development employees early on, having about 30 total employees byOctober 1995. Two early employees of Artemis were from Apple Inc: Andy Rubin, creator of the Android cell phone OS, and JoeBritt. Both men would later be founders of Danger, Inc. (originally Danger Research).
WebTV Networks' business model was to license a reference design to consumer electronics companies for a WebTV InternetTerminal, a set-top box that attached to a telephone line and automatically connected to the Internet through a dial-up modem. Theconsumer electronics companies' income was derived from selling the WebTV set-top box.[3] WebTV's income was derived fromoperating the WebTV Service, the Internet-based service to which the set-top boxes connected and for which it collected a fee fromWebTV subscribers. The service provided features such as HTML-based email, and proxied websites, which were reformatted by theservice before they were sent to set-top box, to make them display more efficiently on a television screen.[3]
WebTV closed its first round of financing, US$1,500,000, from Marvin Davis in September 1995, which it used to develop itsprototype set-top box, using proprietary hardware and firmware. The company also used the financing to develop the online servicethat the set-top boxes connected to. WebTV leveraged their limited startup funds by licensing a reference design for the appliance toSony and Philips. Eventually other companies would also become licensees and WebTV would profit on the monthly service fees.
By the spring of 1996 WebTV Networks employed approximately 70 people, many of them finishing their senior year at nearbyStanford University, or former employees of either Apple Computer or General Magic. WebTV had started negotiating with Sony tomanufacture and distribute the WebTV set-top box, but negotiations had taken much longer than WebTV had expected, and WebTVhad used up its initial funding. Steve Perlman liquidated his assets, ran up his credit cards and mortgaged his house to provide bridgefinancing while seeking additional venture capital. Because Sony had insisted upon exclusive distribution rights for the first year,WebTV had no other distribution partner in place, and just before WebTV was to close venture capital financing from BrentwoodAssociates, Sony sent WebTV a certified letter stating it had decided not to proceed with WebTV. It was a critical juncture for WebTV,because the Brentwood financing had been predicated on the expectation of a future relationship with Sony, and if Brentwood haddecided to not proceed with the financing after being told that Sony had backed out, WebTV would have gone bankrupt and Perlmanwould have lost everything. Brentwood decided to proceed with the financing despite losing Sony's involvement, and furtherfinancing from Paul Allen's Vulcan Ventures soon followed.[3][7]
WebTV then proceeded to close a non-exclusive WebTV set-top box distribution deal with Philips, which provided competitivepressure causing Sony to change its mind, to resume its relationship with WebTV and also to distribute WebTV.[3][7]
The company Igor Software Laboratories, founded by Steve Hales and Jim Nitchals, licensed its SoundMusicSys engine to WebTV,allowing it to play music in formats such as MIDI. Igor contracted three additional musicians to create original music and soundeffects for the device: Brian Salter, Michael Pukish and Peter Drescher.[8] In addition to Igor, Thomas Dolby's audio technologycompany Beatnik (then known as Headspace) also composed music for the device. This led to Beatnik acquiring Igor and itsSoundMusicSys engine, which later became the Beatnik Audio Engine.[9] Dolby considered the usage of sequenced audio to besaving physical space within the devices, while satisfying the needs of television viewers wanting audio to accompany theinternet.[10]
WebTV was announced on July 10, 1996, generating a large wave of press attention as not only the first television-based use of theWorld Wide Web, but also as the first consumer-electronics device to access the World Wide Web without a personal computer.[3][7]After the product's announcement, the company closed additional venture financing, including investments from Microsoft Corporation, Citicorp, Seagate Technology, Inc., Times Mirror Company, and other companies.
WebTV was launched on September 18, 1996, within one year after its first round offinancing, with WebTV set-top boxes in stores from Sony and Philips, and WebTV'sonline service running from servers in its tiny office, still based in the former BMWdealership.[3]
The initial price for the WebTV set-top box was US$349 for the Sony version andUS$329 for the Philips version, with a wireless keyboard available for about an extraUS$50. The monthly service fee initially was US$19.95 per month for unlimited Websurfing and e-mail.[6][7]
There was little difference between the first Sony and the Philips WebTV set-top boxes,except for the housing and packaging. The WebTV set-top box had very limited processing and memory resources, housing a112 MHz R4640 MIPS CPU, 2 megabytes of RAM, 2 megabytes of ROM, and 1 megabyte of Flash memory. The device relied upona connection through a 33.6 kbit/s dialup modem to connect to the WebTV Service, where powerful servers provide back-end supportto the WebTV set-top boxes to provide a full Web-browsing and email experience to the subscribers.[7]
Initial sales were slow. By April 1997, WebTV had only 56,000 subscribers,[7] but the pace of subscriber growth accelerated afterthat, achieving 150,000 subscribers by Autumn 1997,[12] about 325,000 subscribers by April 1998[13] and about 800,000 subscribersby May 1999.[14][15] WebTV achieved profitability by Spring 1998, and grossed over US$1.3 billion in revenue through its first 8years of operation. In 2005 WebTV was still grossing US$150 million per year in revenue with 65% gross margin.[7]
The launch
Because WebTV utilized strong encryption, specifically the 128-bit encryption (not SSL) used to communicate with its proprietaryservice, upon launch in 1996, WebTV was classified as "munitions" (a military weapon) by the United States government and wastherefore barred from export under United States security laws at the time.
[16] Because WebTV was widely distributed in consumerelectronic stores under the Sony and Philips brands for only US$325, its munitions classification was used to argue that the US shouldno longer consider devices incorporating strong encryption to be munitions, and should permit their export. Two years later, inOctober 1998, WebTV obtained a special exemption permitting its export, despite the strong encryption, and shortly thereafter, lawsconcerning export of cryptography in the United States were changed to generally permit the export of strong encryption.[17]In February 1997, in an investor meeting with Microsoft, Steve Perlman was approached by Microsoft's Senior Vice President forConsumer Platforms Division, Craig Mundie. Despite the fact that the initial WebTV sales had been modest, Mundie expressed thatMicrosoft was impressed with WebTV and saw significant potential both in WebTV's product offering and in applying the technologyto other Microsoft consumer and video product offerings. Microsoft offered to acquire WebTV, build a Microsoft campus in SiliconValley around WebTV, and establish WebTV as a Microsoft division to develop television-based products and services, with Perlmanas the division's president.
[3][7]Discussions proceeded rapidly, involving Bill Gates, then CEO of Microsoft, personally. Gates called Perlman at his home on EasterSunday in March 1997, and Perlman described to Gates WebTV's next generation products in development, which would be the firstconsumer devices to incorporate hard disks, including the WebTV Plus, and the WebTV Digital Video Recorders. Gates' interest waspiqued, and negotiations between Microsoft and WebTV rapidly proceeded to closure, with both sides working around the clock toget the deal done.
[3][7] Negotiation time was so short that the hour lost due to the change to Daylight Saving Time the night before theplanned announcement, which the parties had neglected to factor into their schedule, almost left them without enough time to finishthe deal.[3]On April 6, 1997, 20 months after WebTV's founding, and only six weeks after negotiations with Microsoft began, during a scheduledspeech at the National Association of Broadcasters conference in Las Vegas, Nevada, Craig Mundie announced that Microsoft hadacquired WebTV. The acquisition price was US$503 million, but WebTV was so young a company that most of the employees' stockoptions had yet to be vested. As such, the vested shares at the time of the announcement amounted to US$425 million, and that wasthe acquisition price announced.
[3][11] Each of the three founders received $64 million from the sale.[18]Subsequent to the acquisition, WebTV became a Silicon Valley–based division of Microsoft, with Steve Perlman as its president. TheWebTV division began developing most of Microsoft's television-based products, including the first satellite Digital Video Recorders(the DishPlayer for EchoStar's Dish Network and UltimateTV for DirecTV), Microsoft's cable TV products, the Xbox 360 hardware,and Microsoft's Mediaroom IPTV platform.
[7][19][20]In May 1999, America Online announced that it was going to compete directly with Microsoft in delivering Internet over televisionsets by introducing AOL TV.
[15]In June 1999, Steve Perlman left Microsoft and started Rearden, a business incubator for new companies in media and entertainmenttechnology.
[19]In July 2001, six years after WebTV's founding, Microsoft rebranded WebTV as MSN TV.
[21] Contracts were terminated with allother licensed manufacturers of the WebTV hardware except RCA, leaving them as the sole manufacturer of further hardware.Promotion of the WebTV brand ended.In later years, the number of consumers using dialup access had dropped and as the Classic and Plus clients were restricted to dialupaccess, their subscriber count began to drop. Because the WebTV client was subsidized hardware, the company had always requiredindividual subscriptions for each box, but with the subsidies ended, MSN started offering free use of MSN TV boxes to theircomputer users who subscribed to MSN as an incentive not to depart for discount dialup ISPs.
In 2001, Rogers Cable partnered with Microsoft to introduce "Rogers Interactive TV" in Canada. The service enabled Rogers'subscribers to access the Web via their TV sets, create their own websites, shop online, chat, and access e-mail. This initiative was thefirst broadband implementation of MSN TV.
In late 2004, Microsoft introduced MSN TV 2. Codenamed the "Deuce", it was capable of broadband access, and it introduced arevamped user interface and new capabilities. These include offline viewing of media (so long as a user had already logged in prior),audio and video streaming (broadband only), Adobe Reader, support for viewing Microsoft Office documents (namely MicrosoftWord), Windows Media Player, the ability to access Windows computers on a home network to function as a media player, and eventhe ability the use of a mouse. MSN TV 2 also later introduced features originally seen in the first generation of MSN TV, such as itsBeatnik MIDI engine and the ability to play background music while surfing the web. MSN TV 2 used a different online service fromthe original WebTV/MSN TV, but it offered many of the same services, such as chatrooms, instant messaging, weather, news,aggregated "info centers", and newsgroups, and like that service, still required a subscription to use. For those with broadband, the feewas US$99 yearly.
For inexpensive devices, the cost of licensing the operating system is substantial. For Microsoft, however, it would be actualizing asunk cost, and when Microsoft released the MSN TV 2 model, they adopted standard PC architecture and used a customized versionof Windows CE as the operating system. This allowed MSN TV 2 to more easily and inexpensively keep current.
By late 2009, MSN TV hardware was no longer being sold by Microsoft, although service continued for existing users for the nextfour years. Attempting to go to the "Buy MSN TV" section on the MSN TV website at the time resulted in the following messagebeing shown:
"Sorry, MSN TV hardware is no longer available for purchase from Microsoft. Microsoft continues to support thesubscription service for existing WebTV and MSN TV customers."
[22]On July 1, 2013, an email was sent out to subscribers stating that the MSN TV service would be shutting down on September 30,2013.
[23] During that time, subscribers were advised to convert any accounts on the first-generation service to Microsoft accounts andto migrate any favorites and other data they had on their MSN TV accounts to SkyDrive. Once September 30, 2013 finally arrived,the WebTV/MSN TV service fully closed. Existing customers were offered MSN Dial-Up Internet Access accounts with a promotion.Customer service was available for non-technical and billing questions until January 15, 2014.[23]
Source, Wikipedia.