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News Corp’s Fox Entertainment has cut a deal with sister company DirecTV to put FX and Fox Broadcasting content over a broadband line to its new DirecTV Plus DVR, designed by NDS.

The system will become available in March and deliver primetime hits from up to two days before they show on TV, for a payment of $2.99 each. Later in the year, DirecTV subscribers will be able to buy any TV they missed from a primetime series, for just $0.99, up to six or seven days after their national broadcast.

It is understood that content from NBC and its cable networks - USA, Sci Fi and Bravo - will also be added to this VoD system.

These moves reflect the steps other content houses have made in deals with Apple, Google, AOL and Yahoo for making delay TV available. Viewers will have on-demand access to dramas, comedies and documentaries including FX's The Shield, Rescue Me, It's Always Sunny in Philadelphia, and 30 Days, and Fox Broadcasting's 24 and Prison Break. But DirecTV’s relationship with Microsoft leaves us with the feeling of a company backing the wrong horse, saying it would work towards allowing its content to move throughout the home under the control of Microsoft software onto PCs, home networks and portable players.

If this is the full extent of its portable strategy, it has already blown it (we don’t think it is). Windows Media PCs are now shipping in volume, but that’s because any PC you buy comes fully equipped with the Media Center software and not because there has been any conspicuous success out there in the marketplace. Customers are not asking for them and, most likely, not using them.

Under the agreement, the two will work together to enable the flow of digital content among Windows-based PCs, DirecTV’s set-top boxes, and Microsoft PlaysForSure-compatible devices, including the Xbox 360.

It gives the appearance that DirecTV has abandoned its own efforts (which it clearly hasn’t), which are led by UK-Israeli conditional access subsidiary NDS, whereby it would use its own software and smart-card chip technology to force CE makers to incorporate extensions of NDS' own conditional-access system into portable players. Now it appears that it is accepting that the PC is the target destination for taking content off the set-top and has embraced the software-only DRM of Microsoft. Highly contradictory.

The only upside to all of this is that the Xbox 360 was always supposed to be a lot more than a games machine, and is likely to become popular operating as a bridge to the PC world, at least until the Sony PS3 is launched, which can do all the same jobs and more.

This week, Microsoft marginalized itself further by stating at the Consumer Electronics Show that the Xbox 360 would include a HD DVD player later in the year. Of course, given that there will be almost no marketplace and no content for HD DVD compared to Blu-ray, this makes little sense and is unlikely to actually come to pass. It might be alright if this was a recorder, but it won’t be.

But Microsoft can only keep up its anti-Sony stance for a little bit longer if it continues to say it supports this. The Xbox 360 may ship a few million, but this is an optional extra, so the chances are that a low percentage of consumers will buy the add-on, giving the Xbox 360 HD DVD player just a few hundred-thousand shipments. That won’t move the market.

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