Microsoft Scales Back MSN Offerings

Further scaling back its struggling flagship online service, Microsoft Corp. plans to stop producing its own entertainment programming for the Microsoft Network and cut 40 jobs.

Thursday's announcement comes as Microsoft focuses on the Internet, trying to draw more World Wide Web surfers to its popular Web sites and services, such as its Expedia travel reservations and CarPoint auto classifieds.

Microsoft Network's growth has sharply lagged the nation's largest online service, America Online. While MSN ranks second, its membership was stalled at 2.3 million last May before Microsoft stopped disclosing subscriber figures. The company takes pains to describe Microsoft Network as encompassing all its Internet offerings, not just its proprietary service for subscribers paying $19.95 a month.

By contrast, subscribers to America Online, the nation's largest online service, have soared to 11 million.

Microsoft has lost money trying to entertain users of its proprietary online network with programs that never drew many users, analysts say.

The seven online offerings being discontinued include a fictional "soap opera" on people's careers and music-oriented pages that list top-selling albums and other services. The shows will be discontinued April 1. The move comes after Microsoft last year moved some of its online programs to the Internet, offering them for free on its Web sites to everyday surfers.

"The popular sentiment was that Microsoft was not really seeing a return for its dollar in this particular area and maybe it wasn't a good match with the skills that were strongest with the company," said Greg Blatnik, an industry analyst with Zona Research.

Microsoft is trying to boost revenue from people who buy goods and services on its Web sites and from Web advertisers. One way to draw people to its Web sites is by luring subscribers of its MSN online service to click their way to the Internet.

Microsoft's Web sites drew visits from one-third of the 55 million people who used the World Wide Web in January, according to Media Metrix Inc., a New York-based Web measurement company. And MSN.Com, a Microsoft Web site that MSN subscribers are encouraged to click on, drew 11.4 percent of all Web surfers, Media Metrix said.

Microsoft is planning an update of that popular site, code-named Start, toward the end of this year.

"It's very clear to us that in the last year ... that what people want to get out of the Internet is not entertainment programming. What people want is tools and services," said Ed Graczyk, lead product manager for Microsoft Network.

By David E. Kalish
©1998 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed