MSN TV
MSN TV was a web access product consisting of a thin client device that used a television for display, and the online service that supported it. The original WebTV device design and service were developed by WebTV Networks, Inc., a company started in 1995. The WebTV product was announced in July 1996 and later released on September 18, 1996. In April 1997, the company was purchased by Microsoft Corporation and in July 2001, was rebranded to MSN TV and absorbed into MSN.
While most thin clients developed in the mid-1990s were positioned as diskless workstations for corporate intranets, WebTV was positioned as a consumer product, primarily targeting those looking for a low-cost alternative to a computer for Internet access. The WebTV and MSN TV devices allowed a television set to be connected to the Internet, mainly for web browsing and e-mail. The WebTV/MSN TV service, however, also offered its own exclusive services such as a "walled garden" newsgroup service, news and weather reports, storage for user bookmarks, IRC chatrooms, a Page Builder service that let WebTV users create and host webpages that could later be shared to others via a link if desired, the ability to play background music from a predefined list of songs while surfing the web, dedicated sections for aggregated content covering various topics, and a few years after Microsoft bought out WebTV, integration with MSN Messenger and Hotmail. The setup included a thin client in the form of a set-top box, a remote, a network connection using dial-up, or with the introduction of Rogers Interactive TV and the MSN TV 2, the option to use broadband, and a wireless keyboard, which was sold optionally up 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 and telephone lines to deliver service to customers via dial-up, with "frontend servers" that talk directly to boxes using a custom protocol, the WebTV Protocol, to authenticate users and deliver content to boxes. For the MSN TV 2, however, a completely new service based on IIS servers and regular HTTP/HTTPS services was used.
History
Concept
Co-founder Steve Perlman is credited with the idea for the device. He first combined computer and television as a high-school student when he decided his home PC needed a graphics display. He went on to build software for companies such as Apple and Atari. While working 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 who might be interested in what the site had to offer were not using the web.
Early history
A Silicon Valley startup, WebTV Networks was founded in July 1995. Perlman brought along co-founders Bruce Leak and Phil Goldman shortly after conceiving the basic concept. The company operated out of half of a former BMW car dealership building on Alma Street in Palo Alto, California, which was being used for storage by the Museum of American Heritage. WebTV had been able to obtain the space for very low rent, but it was suboptimal for technology development.Before incorporation, the company referred to itself as Artemis Research to disguise the nature of its business. The info page of its original website explained that it was studying "sleep deprivation, poor diet and no social life for extended periods on humans and dwarf rabbits". The dwarf rabbit reference was an inside joke among WebTV's engineers – Phil Goldman's pet house rabbit Bowser was often found roaming the WebTV building late into the night while the engineers were working—although WebTV actually received inquiries from real research groups conducting similar studies and seeking to exchange data.
The company hired many engineers and a few business development employees early on, having about 30 total employees by October 1995. Two early employees of Artemis were from Apple Inc: Andy Rubin, creator of the Android cell phone OS, and Joe Britt. Both men would later be founders of Danger, Inc..
WebTV Networks' business model was to license a reference design to consumer electronics companies for a WebTV Internet Terminal, a set-top box that attached to a telephone line and automatically connected to the Internet through a dial-up modem. The consumer electronics companies' income was derived from selling the WebTV set-top box. WebTV's income was derived from operating the WebTV Service, the Internet-based service to which the set-top boxes connected and for which it collected a fee from WebTV subscribers. The service provided features such as HTML-based email, and proxied websites, which were reformatted by the service before they were sent to set-top box, to make them display more efficiently on a television screen.
WebTV closed its first round of financing, US$1,500,000, from Marvin Davis in September 1995, which it used to develop its prototype set-top box, using proprietary hardware and firmware. The company also used the financing to develop the online service that the set-top boxes connected to. WebTV leveraged their limited startup funds by licensing a reference design for the appliance to Sony and Philips. Eventually other companies would also become licensees and WebTV would profit on the monthly service fees.
Announcement
By the spring of 1996 WebTV Networks employed approximately 70 people, many of them finishing their senior year at nearby Stanford University, or former employees of either Apple Computer or General Magic. WebTV had started negotiating with Sony to manufacture and distribute the WebTV set-top box, but negotiations had taken much longer than WebTV had expected, and WebTV had used up its initial funding. Steve Perlman liquidated his assets, ran up his credit cards and mortgaged his house to provide bridge financing 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 Brentwood Associates, 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 had decided to not proceed with the financing after being told that Sony had backed out, WebTV would have gone bankrupt and Perlman would have lost everything. Brentwood decided to proceed with the financing despite losing Sony's involvement, and further financing from Paul Allen's Vulcan Ventures soon followed.WebTV then proceeded to close a non-exclusive WebTV set-top box distribution deal with Philips, which provided competitive pressure causing Sony to change its mind, to resume its relationship with WebTV and also to distribute WebTV.
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 sound effects for the device: Brian Salter, Michael Pukish and Peter Drescher. In addition to Igor, Thomas Dolby's audio technology company Beatnik also composed music for the device. This led to Beatnik acquiring Igor and its SoundMusicSys engine, which later became the Beatnik Audio Engine. Dolby considered the usage of sequenced audio to be saving physical space within the devices, while satisfying the needs of television viewers wanting audio to accompany the internet.
WebTV was announced on July 10, 1996, generating a large wave of press attention as not only the first television-based use of the World Wide Web, but also as the first consumer-electronics device to access the World Wide Web without a personal computer. 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.
The launch
WebTV was launched on September 18, 1996, within one year after its first round of financing, with WebTV set-top boxes in stores from Sony and Philips, and WebTV's online service running from servers in its tiny office, still based in the former BMW dealership.The initial price for the WebTV set-top box was US$349 for the Sony version and US$329 for the Philips version, with a wireless keyboard available for about an extra US$50. The monthly service fee initially was US$19.95 per month for unlimited Web surfing and e-mail.
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 a 112 MHz R4640 MIPS CPU, 2 megabytes of RAM, 2 megabytes of ROM, and 1 megabyte of Flash memory. The device relied upon a connection through a 33.6 kbit/s dialup modem to connect to the WebTV Service, where powerful servers provide back-end support to the WebTV set-top boxes to provide a full Web-browsing and email experience to the subscribers.
Initial sales were slow. By April 1997, WebTV had only 56,000 subscribers, but the pace of subscriber growth accelerated after that, achieving 150,000 subscribers by Autumn 1997, about 325,000 subscribers by April 1998 and about 800,000 subscribers by May 1999. WebTV achieved profitability by Spring 1998, and grossed over US$1.3 billion in revenue through its first 8 years of operation. In 2005 WebTV was still grossing US$150 million per year in revenue with 65% gross margin.