Wary of AOL, Microsoft Revs WebTV

Brandweek, Feb 28, 2000 by Todd Wasserman

Microsoft, anticipating competition from archrival America Online, is planning to pump more than $25 million into a fall effort supporting its WebTV Networks.

The figure is in line with last year's fourth-quarter outlay for WebTV, though actual spending may exceed that amount as WebTV faces AOL TV, a competing TV set-top box, said a source.

The new campaign, via FCB Worldwide, S.F., will hit in September or October. Creative is still in the works, but will not change much from last year's efforts, the source said. That campaign, which carried no tag, focused on the 25-40 demo, rather than the over-40 crowd targeted in earlier efforts.

AOL TV will be advertised later this year, but no agency has been assigned to the account, an AOL rep said. Fast ads have been handled in-house, with Gotham, N.Y., doing some project work.

Merrill Lynch analyst Henry Blodget in a report said the AOL TV console would likely cost $199-399 plus a $5-10 monthly service fee. Consoles that work with WebTV networks from Sony and Philips start at $99.

Microsoft's push comes as WebTV subscriptions have flattened despite last year's $25 million campaign, said Richard Doherty, a consultant at Envisioneering Group, Seaford, N.Y.

Doherty places WebTV's subscription base at 1 million, of whom a surprisingly high number are price-sensitive senior citizens. "Most knowledgeable seniors know they can get a PC with [Internet] service for $10 a month," he said. WebTV currently charges $22-25 a month to $35 with satellite service for WebTV.

Microsoft last week addressed the issue with a print ad via FCB touting two months' free service. No TV ads are planned for that push.