UPDATE: MS, News Corp.'s NDS in Digital TV JV

WASHINGTON (03/07/2000) - Microsoft Corp. and News Corp. company NDS Group PLC have formed an alliance to develop software supporting digital television, hoping to accelerate adoption of digital TV by luring viewers with more features.

Under the agreement, Microsoft will license NDS software to create a new product in the Microsoft TV software family offered to cable, satellite and other types of network operators.

"This marks a clear message that we are providing a family of products for the Microsoft TV platform," Phil Goldman, general manager of TV platforms for Microsoft, said in a conference call today. "We expect the work with NDS will provide great, robust digital offerings for today's set-top boxes ... and we expect it to be a major step forward in the development of enhanced TV."

There is tremendous demand for more digital television features, including support for electronic commerce, digital programming, electronic program guides and interactive programming and advertising, Goldman said. "All of these are part of the road map that we are defining with NDS," he added.

Goldman did not say how much the software would add to a typical consumer's cost, but he said the price would "not be a barrier for deployment." The goal is to get the price of the box to be as low as possible and increase penetration, he said, adding that the offer does not affect Microsoft's Web TV.

NDS supplies access software and interactive applications based on open standards for digital TV broadcasters and set-top box makers. Its software already operates in more than 1.5 million digital set-top boxes manufactured by several major consumer-electronics manufacturers, Abe Peled, president and chief executive officer of NDS, said in the conference call.

Consumers will enjoy wider choice and convenience and more engaging and entertaining interactive television programs that will drive the adoption of digital TV around the world, Peled said.

"They will be able to easily access the most popular services and merchandise from the Internet at the click of a button on their remote control," he said.

Under the agreement between Microsoft and NDS, the two companies will jointly market the digital solutions for network operators. They will have an ongoing engineering relationship to continue the evolution of the software and to develop enhanced TV applications and services, Goldman said.

The alliance will also be a basis for deploying a host of interactive features available through the technology of Peach Networks Ltd., which Microsoft announced last week it plans to buy. [See "Microsoft to Acquire Israeli Peach," Feb. 29.]Financial terms of the deal between Microsoft and NDS were not disclosed. The Microsoft TV platform, based on open DVB (Digital Video Broadcasting) and Internet standards, includes software for digital TV devices such as set-top boxes, as well as server software, Microsoft and NDS said.

News Corp., NDS' parent company, run by media mogul Rupert Murdoch, is a communications company involved in the production and distribution of motion pictures, television broadcasting and publication of newspapers, magazines and books.

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080, or at http://www.microsoft.com/. News Corp, in New York, can be contacted at +1-212-852-7000, or at http://www.newscorp.com/. NDS, in Middlesex, England, can be contacted at +44-208-476-8000, or at http://www.ndsworld.com/.

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