• by Laurie Sullivan , Staff Writer, Yesterday

Microsoft is exiting the movie and TV distribution businesses after two decades of supporting the content, and will no longer offer new movies or TV shows for purchase on Microsoft.com, the Microsoft Store on Windows, or the Microsoft Store on Xbox.

Dull-Caterpillar3153 on Reddit wrote: "As someone who has owned Xbox consoles for like 16 years I genuinely never bought a single tv show or movie through their service."

Perhaps that is why Microsoft decided to ditch the service. It identifies a shift in focus for Microsoft, giving up the idea of providing TV and movies for other types of entertainment such as gaming and AI-related content.

While it does not apply to gaming, it does provide insight into the company's core businesses.

Microsoft is likely to anchor its resources and efforts toward other strengths, such as AI-powered advertising, Xbox gaming, cloud computing, and productivity software.

Microsoft did not make much revenue on selling movies and TV shows. Most revenue from entertainment content came from gaming in 2024, it stated in its earnings release for fiscal year 2024.

Gaming revenue increased $6.0 billion or 39%, driven by growth in Xbox content and services. Xbox content and services revenue increased 50% driven by 44 points of net impact from the Activision Blizzard acquisition, the company reported. Xbox hardware revenue fell 13% driven by lower volume of consoles sold.

Could the shift lead to stronger advertising platforms and targeting capabilities, and more valuable audience insights for advertisers on Microsoft's remaining platforms?

Microsoft's decision could reflect a bigger trend in the streaming industry toward prioritizing ad-supported tiers and leveraging AI for personalized advertising experiences.

Its partnership powering Netflix's ad-supported plan could take a more prominent role. They are also focusing on AI-powered tools and platforms like Copilot to improve ad effectiveness and monetize media properties.

The company said it also will allow consumers in the U.S. to sign up for the Movies Anywhere platform, a cloud-based digital locker and streaming platform, to connect previously purchased movies from Microsoft and other Movies Anywhere retailers. Some of those retailers include Google Play, iTunes, Amazon Prime Video, Verizon, DirectTV, YouTube, Vudu, and Comcast’s Xfinity.

"I own over 200 tv shows and movies through this app," Medium-Armadillo69 wrote in Reddit. "Yall make fun, but I never thought of it as 'buying movies on a video game console.' I thought of it as owning them on my Microsoft Account, which is linked directly to Windows, an OS that dominates the global market unlike Xbox, and so I felt secure that it was a good place for me to centralize my digital content."

"I somewhat saw this coming in recent years, when shows stopped getting physical and digital releases for the most part, requiring that you go subscribe to a streaming service to watch them, but i hoped i was wrong," Medium-Armadillo69 wrote -- preferring to "own" content this way rather than having to subscribe.

Consumers are not eligible for refunds for the movies they have already purchased, with Microsoft pointing to the Microsoft Store's Terms of Sale. They can continue to access content previously bought from the Movies & TV app in Xbox or on Windows devices. The company said it will continue to provide tech support for movies and TV content already purchased through its official stores.

The change appeared in the company's terms & services earlier this week, with an update in Microsoft's FAQ for Xbox and Windows pages. That update confirmed as of July 18, "Microsoft has stopped selling new movie and TV content."

The exit from movie and TV businesses might seem to reduce advertising channels associated with content, but I believe it signals a realignment with a focus on strength in technology and data that will create more sophisticated AI-driven advertising solutions. 

In late 2023, Google and Apple did something similar. With the release of tvOS 17.2, Apple stopped selling movies and TV shows on the iTunes store, and moved them to the Apple TV app. Google discontinued Google Play Movies and TV, and moved all of the content to the Google TV app and YouTube.