David Bloom is a contributor to Deadline.
Microsoft’s announcement this morning that Steve Ballmer, the oldest of the old guard at what was once the biggest of the big tech companies, is leaving as CEO should be a major deal in Hollywood as well as Silicon Valley. After all, Ballmer and the tech giant he’s helped run for more than three decades have spent billions of dollars on countless entertainment-related initiatives trying to take their tech success to Tinseltown, including the latest big hire of former CBS network chief Nancy Tellem as president of Microsoft’s entertainment and digital media division. But will Hollywood notice Ballmer’s departure? Not really. He doesn’t even do the big CES keynote address anymore. And Hollywood’s likely indifference says a lot about Ballmer, Microsoft and the challenges the entire tech industry continues to have in decrypting Hollywood (and to be fair, vice versa).
Related: Microsoft CEO Steve Ballmer To Retire Within Next Year
At the May unveiling of the Xbox One, Tellem got on stage to say her unit is producing video programming for the console across every genre. She intimated that the studio’s programming would move far beyond traditional television, to take full advantage of the connectivity, motion-detection, emotion-detection and other interactive capabilities of the Xbox One. Less clear is whether that interactive programming will find an audience, especially given Xbox One’s high price, poor E3 showing and competition from a new Sony device and lots of far cheaper and more mobile alternatives. Audience sizes, especially in the first couple of years of the new console, will almost certainly be uncomfortably small for yet another expensive entertainment venture.
To head off some of that, as Deadline’s Nikki Finke and David Lieberman wrote, Ballmer recently joined Tellem on a series of meetings with Hollywood big-shots. The June trip was designed to both test support for their programming initiatives and build more interest among talent, dealmakers and producers. What hasn’t surfaced is whether those conversations have turned into anything substantive.
Related: Nancy Tellem Talks Xbox Entertainment Studios, Finally
Read More »
Related: What Does Ballmer’s Departure Mean For Microsoft In Hollywood?
Steve Ballmer succeeded Microsoft co-founder Bill Gates as CEO in 2000. On announcing his retirement this morning, he said, “There is never a perfect time for this type of transition, but now is the right time.” One question Ballmer’s exit brings up is how this might affect Microsoft’s nascent Xbox Entertainment Studios. Ahead of the E3 confab in June, Ballmer was escorted around town by the division’s president Nancy Tellem to lobby her closest Hollywood pals with an intimate preview of the new Xbox One capabilities. It was part of Ballmer’s effort to drum up exclusive content for Xbox One’s new customized TV and entertainment apps. But it was also, an insider told Deadline at the time, “to reiterate Microsoft’s commitment to transitioning its business to devices and services and to explaining that Hollywood entertainment is a big part of that. Microsoft in the past has just dipped a toe but now has a real commitment.” In July, Microsoft announced a sweeping reorganization that created teams to focus on various functions rather than dividing the company by products. In his statement today, Ballmer said, “My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.” MarketWatch notes that Microsoft has more than tripled in size since Ballmer took over, but revenue growth has stalled recently as PC sales have declined. In a memo to employees, Ballmer said he would continue as one of Microsoft’s “largest owners.” Prior to today, Microsoft stock had gained 21% this year. Shares were up more than 7% after this morning’s opening bell. Here’s Microsoft’s official release:
REDMOND, Wash. — Aug. 23, 2013 — Microsoft Corp. today announced that Chief Executive Officer Steve Ballmer has decided to retire as CEO within the next 12 months, upon the completion of a process to choose his successor. In the meantime, Ballmer will continue as CEO and will lead Microsoft through the next steps of its transformation to a devices and services company that empowers people for the activities they value most.
Read More »
The reorganization is so sweeping that the company gave it a brand: One Microsoft. The goal is to “see our product line holistically, not as a set of islands,” CEO Steve Ballmer tells staffers in a memo today. Instead of dividing the company by products, the new structure includes 12 teams that focus on functions including Engineering, Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and COO. In addition, Ballmer says, each major initiative “will have a champion who will be a direct report to me or one of my direct reports” and be empowered to “drive a cross-company team for success.” Among other things, Microsoft will “focus on completely reinventing experiences like creating or viewing a creative document” or communicate at work and home. “We are going to immerse people in deep entertainment experiences that let them have serious fun in ways so intense and delightful that they will blur the line between reality and fantasy.” Investors seem to like the change. Microsoft shares are up about 2% in mid-day trading. But BGC Financial analyst Colin Gillis warns that “you don’t make massive sweeping changes like this unless something is wrong.” Microsoft will be harder to break up, he adds, and the reorg “increases the power of the CEO” because it eliminates heads of business groups. “Major reorgs such as this can serve as a negative distraction for months before potentially offering benefits.”
EXCLUSIVE: Microsoft’s nascent unit run by Nancy Tellem continues to staff up, with Albert Page signing on as VP Creative. Before joining Xbox Entertainment Studios, he was SVP Production and Development at Mandeville Films, where he developed films including The Proposal and Best Picture Oscar nominee The Fighter. Page’s résumé also includes a stint at The Alchemist Transmedia Company, where he developed global brand strategies and multiplatform original content for clients including Coca-Cola. Based in L.A., he will report to Lydia Antonini, SVP Creative for Xbox Entertainment Studios. The new division last month hired Elan Lee as Chief Design Officer. Two weeks before that, Microsoft CEO Steve Ballmer came to town to get TV moguls and agents up to speed on the new Xbox One’s capabilities.
Nancy Tellem Talks Microsoft’s Xbox Entertainment Studios, Finally
Next-Gen Xbox One Unveiled With Content Including ‘Halo’ Series
EXCLUSIVE: A week-plus after Microsoft launched its more entertainment-focused Xbox One, Elan Lee has been tapped as Chief Design Officer at Xbox Entertainment Studios, the unit run since September by former CBS Inc. No. 2 Nancy Tellem. After starting his career at Microsoft Game Studios as Lead Designer on the original Xbox, he left to co-found and serve as VP of 42 Entertainment, the company behind the immersive “Why So Serious?” campaign for The Dark Knight. After that he launched Fourth Wall Studios, where he was Chief Creative Officer. Based in Los Angeles, Lee will report to Tellem.
Related: Michele DiLorenzo & Jada Miranda Among Nancy Tellem’s First Top Executive Hires At XBox Entertainment Studios
Related: Nancy Tellem Talks Microsoft’s Xbox Entertainment Studios, Finally
David Bloom is a Deadline contributor.
Just a week after a splashy but criticized debut at E3, Microsoft has backed off controversial policies for its upcoming Xbox One game console that had clouded its chances against Sony’s competing PlayStation 4. Don Mattrick, who heads Microsoft’s Xbox unit, posted a blog entry saying the company had heard from many gamers and, “You told us how much you loved the flexibility you have today with games delivered on disc. The ability to lend, share, and resell these games at your discretion is of incredible importance to you. Also important to you is the freedom to play offline, for any length of time, anywhere in the world.” Read More »
The so-called store-within-a-store at Best Buy will offer Windows-based tablets and PCs, phones, Microsoft Office software, and Xbox consoles, the companies said today. Between this month and September the retail chain plans to allocate as much as 2,200 square feet of space at 600 U.S. and Canadian outlets to what will be called the Windows Store. These spaces will provide “a large-scale, hands-on customer experience that will show customers how Windows and Microsoft devices and services can make it easier for them to work and play,” Microsoft’s Tami Reller says. Best Buy will add more than 1,200 Microsoft-trained sales people at the Windows Stores. Microsoft also will have a presence on Best Buy’s Web site. This initiative follows the retailer’s agreement in April to launch similar internal stores for Samsung products as part of Best Buy’s effort to regain some of the market share it has been losing to online stores led by Amazon.
David Bloom is a Deadline contributor.
Sony’s big annual pre-E3 media briefing Monday night set up a potentially brutal price competition with Microsoft’s next-gen game console this holiday season, with the PlayStation 4 costing $100 less than the Xbox One. As predicted, Sony also touted more of the PS4’s entertainment capabilities than it did in an initial unveiling event in February, even inviting Sony Entertainment Chairman Michael Lynton onstage for the first time. Lynton promised enhanced video and music programming on the PlayStation Network online service, with content tailored for gamer interests.
“Sony Pictures will do everything in our power to drive the success of the PlayStation 4 by developing programming with gamers in mind and providing access to incredible content,” Lynton said. The Video Unlimited and Music Unlimited services will launch the same day as the PS4. Sony also will add the Flixster online movie service to the PlayStation Network later this year, joining apps there for such streaming services as Netflix and Hulu. Read More »
David Bloom is a Deadline contributor.
Microsoft announced today that the Xbox One will cost $499 in the U.S., 499 Euros in Europe and will launch this fall in 21 markets around the world. The company made the announcement this morning after two hours of game demos at its pre-E3 extravaganza. The U.S. launch was tabbed only as “November, 2013″, in plenty of time for the crucial holiday sales season. After spending most of its May 21 unveiling event talking up the Xbox One’s entertainment capabilities, including a Steven Spielberg-produced Halo TV series, this time Microsoft focused almost exclusively on games, including a new Halo title to arrive early next year. The machine’s price is a bit steep for many consumers, but the company is pitching the Xbox One as a replacement for cable-TV set-top boxes, Blu-Ray players, streaming-video devices and more, all wrapped up in a machine that also will can play the next Halo game and a dozen other exclusive, high-end titles, among much else. Because the Xbox One can replace the set-top box, Microsoft reportedly has been exploring subsidy models, common in the mobile phone business, with cable companies or other pay-TV providers as a way to reduce upfront costs and drive adoption.
David Bloom is a Deadline contributor.
It’s a huge question for the Electronic Entertainment Expo, which opens Tuesday after the Big Three makers of game consoles – Microsoft, Sony and Nintendo – each do their annual pre-show media extravaganzas by turns beginning Monday morning. Disney will unveil games tonight based on its movies The Lone Ranger and Monsters University, though it’s possible they may also talk about games based on their Marvel and Star Wars movie franchises, especially after recently laying off many of LucasArts game designers. Other big game publishers will also unveil titles in pre-show events Monday afternoon.
All the hoopla comprises something of a return to the game industry’s heyday, say 10 years ago, when the expo was a noisy, massive, overwhelming beast that consumed the Los Angeles Convention Center for a week. It attracted tens of thousands of media and industry insiders, who faced something of a death march through game company “booths” costing millions of dollars, with dozens of often outlandishly attired staffers, followed by evening parties for 10,000 people featuring performers such as Beck and India.Arie. Read More »
EXCLUSIVE 10 AM… UPDATEd 12:30 PM : Deadline has learned the meetings were an intimate preview of the new Xbox One capabilities before next week’s E3 confab where secretive Microsoft will unveil details of the device’s technology. Microsoft CEO Steve Ballmer was escorted by his entertainment studios president Nancy Tellem for the visit late last week to lobby her closest Hollywood pals: her former boss CBS chief Les Moonves, Sony TV boss Steve Mosko, and WME co-CEOS Ari Emanuel and Patrick Whitesell. It’s all part of Ballmer’s effort to drum up exclusive content after Microsoft intends to launch 40+ new voice-controlled customized TV and entertainment apps on Xbox One. But it was also more, one insider tells Deadline, “to reiterate Microsoft’s commitment to transitioning its business to devices and services and to explaining that Hollywood entertainment is a big part of that. Microsoft in the past has just dipped a toe but now has a real commitment.” Tellem wanted to give Ballmer 3 different perspective: the broadcaster, the independent producer, and the agent. Deadline has learned that Ballmer touted “what we could do with” the Xbox One in sports, music, reality and scripted programming, promising execs that they’d see more sophisticated technology and that his company “doesn’t want to be a cable channel”. He also met Tellem’s Santa Monica team for the first time and outlined his vision for a new Xbox One world. Ballmer’s trip to Hollywood will only anger more hard-core gamers who already were miffed by Microsoft’s focus on entertainment when it unveiled the product on May 21. (Xbox One will be on store shelves later this year). The hard-core gamers fear Microsoft sees its new Xbox One more as a souped-up Internet-connected, voice- and motion-controlled cable box than a next-gen gaming console. Read More »
David Bloom is a Deadline contributor
Microsoft finally unveiled the Xbox One, its next-generation successor to the Xbox 360 game console, with an impressive demonstration of a voice- and gesture-controlled device focused more on integrating and controlling all kinds of entertainment and social capabilities far beyond just playing videogames. The #XboxReveal event at Microsoft’s Seattle-area campus included the announcement by Xbox Entertainment Studios President Nancy Tellem that Steven Spielberg will create a new live-action TV show based on the “Halo” game franchise. In a video, Spielberg, a longtime game fan who also oversaw the launch of the DreamWorks Interactive game studio in the 1990s, briefly said “the Halo universe is an amazing opportunity to be at an intersection where technology and myth-making converge.”
Related: Nancy Tellem Talks Microsoft’s Xbox Entertainment Studios Read More »
David Bloom is a Deadline contributor
Microsoft’s Larry Hryb said on his blog the May 21 announcement will be held on the Microsoft campus and be simulcast on Spike TV and Xbox’s online outlets. “On that day, we’ll share our vision for Xbox and give you a real taste of the future,” he wrote. The latest Xbox has been long expected as both Sony and Microsoft have moved to update their aging video game consoles, which also can stream online video and music content from sources such as Hulu Plus and Netflix, play DVDs and CDs and more. In February, Sony did an initial rollout of PlayStation 4, which showcased the games that will be available when it launches along with some technical details. That event was mostly targeting game developers, however, and did not specify a launch date, system specifications or price. Both companies are expected to hold more extensive rollouts of their new devices as part of the E3 video game trade show June 11-13 in Los Angeles.
Related: Microsoft Reveals Xbox Community Data
In a first of its kind move, Europe’s antitrust regulators on Wednesday levied a fine against Microsoft for breaking a settlement agreement. The $732M sanction against the tech giant came after the competition authority was tipped off that Microsoft had failed to comply with an earlier promise to provide buyers of new computers in Europe the option to opt out of its built-in Internet Explorer browser. Among the companies that first complained to the EU about Microsoft’s non-complicance was arch-rival Google, The Financial Times reported. The EU’s hard line against Microsoft is seen as a warning shot that it is serious about enforcing other antitrust settlements. And, since Google is involved in its own negotiations with European regulators over their concerns about how it runs its search and advertising business, the precedent-setting Microsoft settlement could come back to haunt it.
“It’s important for the Commission to show it’s serious in this case because this will set a precedent, and because the commission increasingly uses settlements to help reach solutions more quickly, especially in the fast-moving technology sector,” Nicolas Petit, a professor of competition law and economics at the University of Liège, told The New York Times. According to the FT, Joaquín Almunia, the European Union competition commissioner, made an indirect reference to the talks with Google when he said he’d asked his staff “to be extremely careful about how we design the monitoring and compliance” provisions of antitrust pacts. Read More »
Related: Microsoft Reveals Xbox Community Data
Nancy Tellem has always been a pioneer, first as a woman in the traditional TV entertainment biz and then as #2 to Les Moonves at CBS Inc. When she transitioned to a consulting role in January 2010, Tellem indulged her passion for the digital world full-time. Meetings with Microsoft to discuss CBS/CW evolved until June 2012 when, after three months of negotiations, Microsoft announced her appointment as Entertainment & Digital Media president. Now she’s expanding her turf while Microsoft expands its entertainment footprint. At the ’D: Dive Into Media’ industry event late Monday, she spilled about her vision for entertainment on Xbox and about her new Los Angeles-based Xbox Entertainment Studios. But Microsoft and innovation do not go hand in hand: it’s been a digital slowpoke from the beginning and now can’t even make a decent computer operating system. Not only is Windows 8 a bomb, but its brand new Surface tablet is a bust. Which leads us to successful Xbox.
Tellem said that, during 2013, Microsoft is planning to launch more than 40 new voice-controlled customized TV and entertainment apps on Xbox. “We want to partner with the Industry to bring entertainment into a new era,” she told the panel. “It’s an era when interactive entertainment becomes the greatest form of all entertainment – and we couldn’t be more excited to play a part in it.” Read More »
Related: Nancy Tellem Talks Microsoft’s Xbox Entertainment Studios
Microsoft is one of the most secretive companies in the world. So it’s news that Yusuf Mehdi, corporate VP of Microsoft’s Interactive Entertainment Business, on Monday night released new data about entertainment usage on Xbox and how it’s “exploded”. He claims there are now more than 76 million Xbox 360 consoles around the world — or 3 times the number of original Xbox consoles sold. In 2012, the amount of TV and other entertainment offerings on Xbox almost tripled, Mehdi claims, now surpassing 100 custom voice-controlled TV and entertainment apps on Xbox LIVE. “Yes, we started with video games, but we have been on a journey to make Xbox the center of every household’s entertainment.” Here’s more, according to a Microsoft news release about Mehdi’s talk at the ‘D: Dive Into Media’ conference:
Living room entertainment is in its largest evolutionary period since the transitions of black-and-white to color, and from standard definition to high definition. The Xbox 360, alongside Microsoft’s entertainment industry partners, is at the forefront of that evolution as one of the only devices that brings all forms of entertainment together in one device, while making access to content easy and providing new ways to interact with existing programming.
Social has been an important part of Xbox from the beginning, and that’s true today more than ever. The Xbox LIVE community has grown to 46 million members, a 15% growth since last year.
2012 also marked the Xbox’s biggest year for entertainment and games usage. Users enjoyed more than 18 billion hours of entertainment in 2012, with entertainment app usage growing 57% year over year globally. Last year in the United States, Xbox LIVE Gold members averaged 87 hours per month on Xbox, an increase of 10% year over year.
Read More »
Shares are down about 1.4% in post-market trading following the release, which shows a decline in revenues for the Entertainment and Devices Division which includes the Xbox. Microsoft ended its fiscal Q2 with net income of $6.38B, -3.7% vs the last three months of 2011, on revenues of $21.46B, +2.7%. Analysts expected revenues to come in a little higher, at $21.53B. But earnings at 76 cents a share slightly beat forecasts for 75 cents. Revenues at the Windows Division were up 24% to $5.88B. Microsoft says it has sold more than 60M licenses for its new Windows 8 operating system. But Entertainment and Devices was down 11% to $3.77B — although the company says it’s just off 2% to $4.15B if you factor in previously deferred revenue for pre-sales of Windows 8 on phones and other gadgets. The Business Division was down 10% to $5.69B. But here, too, Microsoft says the numbers would look better — +3% to $6.48B — if you include deferred revenue for pre-sales of upgrades for Microsoft Office. “Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” CEO Steve Ballmer says. “With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and … Read More »
Steven Sinofsky, the president of Microsoft’s Windows and Windows Live operations, is leaving the company, according to media reports. The announcement comes just days after Microsoft launched Windows 8. Sinofsky will be succeeded by Julie Larson-Green, who will head the Windows hardware and software division, Reuters reports. Tami Reller will take over responsibility for the Windows business, while retaining her posts as CFO and chief marketing officer. Both Larson-Green and Reller will report directly to Microsoft CEO Steve Ballmer.
Related: Microsoft Shares Fall After CEO Says Sales Of Its New Surface Tablet Have Been Modest
Talk about scratching the Surface. Microsoft CEO Steve Ballmer inadvertently dinged his company’s launch campaign for its Surface tablet by telling France’s Le Parisian in an interview that sales are “starting modestly.” To be fair, he added that critics’ response to the device was “phenomenal” — and that initial sales were limited because the tablet is still just available online and at a few stores. Still, his tempered comment, along with his refusal to project potential sales, contributed to a 2% drop in Microsoft’s stock price this afternoon. The company has a lot riding on the tablet, which includes Microsoft Office programs and can be paired with a keyboard cover to function like a conventional laptop computer. Strong sales “would come as a positive surprise to investors and demonstrate [Microsoft's] relevance in this important market,” Cowen & Co analyst Gregg Moskowitz says today. Read More »