Another Software Giant Moves Into Media

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Even casual tech observers should at this point be well aware of the dramatic shift slowly taking place in the way we as consumers access our favorite programming options. With the rise of mobile devices and the expansion of Internet access, the average person now enjoys a bevy of options for viewing his or her favorite shows, movies, and more. And believe me, this space just got a whole lot more crowded.

Yesterday, software giant Microsoft (NAS: MSFT) announced plans to offer streaming cable services from Comcast (NAS: CMCSA) and Verizon Communications (NYS: VZ) over its Xbox Live platform.  This deal only makes too much sense for all parties involved.

This surge in demand for online content seems like a solid deal for both content providers and its new online host. The content providers gain access to another large subscriber channel. Microsoft has 35 million Xbox Live subscribers to Comcast's 22.5 million and Verizon's 3.8 million FiOS TV subscribers. 

At the same time, the growing number of content options available to consumers through their Xbox Live platform should help attract more subscribers as well, helping drive increasing revenue streams for the service. Microsoft already offers an attractive set of streaming content options, including Netflix (NAS: NFLX) content, instant video from Amazon.com (NAS: AMZN) , access to ESPN and Facebook, and more. Microsoft's done an admirable job merging various entertainment media into a single source, especially one that generates subscription revenue for the company. 

Mr. Softy's taken a lot of heat over the past several years for failing to recognize or react to the changing conditions in the software landscape, with some parties even going as far as calling for the ouster of longtime CEO Steve Ballmer. Microsoft badly missed the rise of mobile devices, failing to develop a decent mobile operating system that would have given it a chance to continue to dominate the post-PC world. However, recently the company, counted out by many, still might have some magic left in its tank.

The reviews for its new Mango operating system came in largely positive. If it can score a hit with the smartphone crowd, it stands at least a fighting chance to maintain its place in the post-PC future. This move seems in the same vein. It seems to be trying to align itself more and more with shifting consumer preferences. It's playing serious catch-up to competitors such as Apple and Google, which dominate the mobile markets, but it does seem to have some kind of strategic vision. 

Foolish bottom line
Microsoft, though still far behind the leaders, has made some adept strategic moves of late. It has a long way to go, but with an eye toward building out its Xbox platform into a strong content-delivery mechanism and its purportedly strong mobile operating system en route, the company could finally be checking into the present, instead of languishing in the past.

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At the time this article was published Fool contributor Andrew Tonner holds no positions in any of the companies mentioned in this article.  The Motley Fool owns shares of Microsoft, Google, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com, Apple, Google, Netflix, and Microsoft, creating bull call spread positions in Apple and Microsoft, and creating a bear put spread position in Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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