Microsoft Corp. and NBC announced an alliance today that brings computers and television one step closer to melding into each other.
The alliance brings the world's largest software company together with one of the world's largest TV conglomerates to develop content for computer networks, CD-ROMs, interactive television and traditional broadcast media.
After the announcement, Microsoft stock jumped about $3.75 to an all-time high of $85 in late trading.
Eventually the companies want people to be able to watch television on their computers and run computer functions on their TV sets.
But the most immediate benefit of the partnership will be seen by computer users who subscribe to The Microsoft Network, the new online service set to open to the public in August.
The network, which will offer news, entertainment, reference material and other features, will include material from NBC's entertainment, sports, news and programming divisions as well as from CNBC financial-news TV network.
NBC also plans to run advertising on its Microsoft Network site.
In addition, The Microsoft Network would provide forums for users to "chat" about television programming and eventually could include TV video clips, said Microsoft Chairman Bill Gates.
"I think both organizations have a goal of really learning a lot, getting out in the marketplace and seeing what the reaction is," Gates said during a conference call with reporters.
Gates said Microsoft would use NBC content such as coverage of the 1996 Summer Olympic Games, elections and personal-finance issues on the online service.
Microsoft might work with other major television networks as well, Gates said, but would focus on the NBC alliance.
"This is the first indicator of what's to come in terms of big media (partners) for Microsoft," said Michael Rinzel, a computer-industry analyst with the New York firm Jupiter Communications.
Rinzel said the deal gives Microsoft key momentum in its drive to become a leader in the convergence of television and computers.
Already, the Redmond-based company has said it will co-develop online content with Dreamworks SKG, the new Hollywood studio formed by director Steven Spielberg, former Disney Studios chairman Jeffrey Katzenberg and recording executive David Geffen.
And just last week, the company announced 43 new content providers for The Microsoft Network, including the ESPN sports television network, C-SPAN, Court TV and the Home Shopping Network.
Rinzel said Microsoft's strategy is to develop these services first for computer online services, then transform them into features for interactive television.
Gates and Bob Wright, NBC's president and chief executive, said their alliance would combine NBC's mass-market reach with Microsoft's customer base and distribution channels.
NBC, which is owned by General Electric Co., will receive advertising revenue from its service on The Microsoft Network, as well as receiving help from Microsoft in developing content for the online service and for CD-ROMs. Gates and Wright would not divulge details of their financial arrangement, though.
In addition to collaborating on the development of interactive television -an infant technology that so far has no proven market - future possibilities for the NBC-Microsoft partnership include improving CD-ROM technology so those computer disks can include more video. CD-ROM video now is sparse and very slow and choppy to view.