Meanwhile, Google Inc. and Yahoo Inc. already are getting users to contribute video to their sites for others to watch. And Time Warner's AOL is finally taking advantage of its parent's premium content, this month promising online video from Warner Bros., HBO and broadcast television.
Yet after investing billions of dollars and working doggedly behind the scenes, Microsoft executives are predicting visible results within a year.
"We'll see a broader range of movies available for both rental and ownership" via the Internet, Gates said from his corner office. And he said those movies would become available much sooner in their life cycle, "closer to the pay-per-view-type release date."
The pact with Time Warner called for Microsoft to pay $750 million in compensation for its misdeeds and for the two companies -- until then mainly rivals in selling Internet access -- to collaborate on ways to keep video from being copied indiscriminately. Parsons later directed Time Warner to join with Microsoft in buying a combined majority stake in ContentGuard, which holds patents on anti-copying techniques.
Walt Disney Co. was so concerned about missing out that it called Microsoft and asked for a similar alliance in writing, minus the cash. And the other studios are coming along, spurred by Gates' chats with News Corp. Chairman Rupert Murdoch and other industry captains, many of them at the annual media conference held by investment bank Allen & Co.
Hollywood negotiators say the key has been Microsoft's realization that it can't dictate terms the way it has with computer makers. After it was left in the dust by Apple's iTunes, they say, Microsoft's arrogance evaporated.
"They get it better than they used to," said one studio's new-media executive, who like others declined to be identified because of the sensitivity of negotiations. "They're trying to learn lessons from their failure on the music side, where Apple blew them out of the water."
Perhaps the most significant fruit emerged a year ago with the formation of a group that is close to finishing a rights-management system for high-definition video. Backers of the Advanced Access Content System, known as AACS, include tech firms Microsoft, Intel Corp. and IBM Corp.; media companies Warner Bros. and Disney; and consumer electronics companies Panasonic, Toshiba and Sony, which also makes movies.
