The Associated Press has moved their Online Video Network back-end from MSN to thePlatform reports PaidContent, quoting Jane Seagrave, SVP for AP’s global product development unit:

When we got to discussing renewal, we jointly and very amicably agreed that it no longer made sense to have Microsoft handle both ad sales and technology. We’ve been pleased with Microsoft’s performance as an ad sales rep, so decided to stick with them.

In other words, MSN Video isn’t nimble enough to adapt to future technology changes. Even MSNBC saw fit to do away with the long-despised MSN video solution, and the AP despite a likely Silverlight pitch and the technical hurdles of switching their thousands of partners to a new provider, still opted to leave Microsoft.

A quick business school aside here, switching costs may be the least appreciated consideration in the online video business today. A number of media companies have gotten in bed with companies like Move Networks that hold very high switching costs; not necessarily a smart move in an industry where the threat of entry of new competitors and new technologies is so high.

This sentiment is summed up well in thePlatform blog:

Finally, AP is taking advantage of thePlatform’s open ability to adapt to our customers’ needs as they grow. As AP wants to take advantage of improving video technologies, or address new business opportunities, thePlatform will be there to support them.

Unlike the majority of mainstream media companies which continue to operate as if they exist in the same network and studio content-driven oligarchy, the AP’s video network and the many new media companies that rely on longer tail content are focusing on becoming more efficient.

By partnering with multiple specific technology partners - and playing the high number of content management, ad-sales, and content delivery competitors off of each other a content company can mix and match for a best-in-class, lower cost solution while ensuring that they leave their future options open.

I defended Microsoft’s $300 million Bill Gates / Jerry Seinfeld ad campaign, but really, what Apple’s doing with video ads like those on the New York Times homepage today is probably a lot more effective.

Head over to NYTimes.com today to check it out.

Bill Gates and Jerry Seinfeld go shoe shopping. The 90 second ad produced by Crispin Porter+Bogusky during NFL opening night kicked off Microsoft’s $300 million ad campaign and has already been labeled a “bigger disaster than the Hindenberg.”

Above: Shoe Circus - Seinfeld and Gates

Personally, I don’t think it’s so bad. Gates and Seinfeld are a funny combination and as Ad Rants points out it’s kind of “appealing to see Bill Gates depicted as Ordinary Dude, platinum member of a cheap shoe retailer.”

Of course then Seinfeld goes home to his garage full of Porches and Bill Gates goes home to this.

Ironically, as part of the campaign, Microsoft has posted the video on YouTube and is buying Google ads to drive viewers to watch the ad in Flash at Microsoft.com/windows.

On the same day rumors circulated that Microsoft is seeking to offload Agency Avenue A Razorfish to WPP, they  announced a strategic investment with Move Networks. Both of these are very good moves.

Say you’re Microsoft, the former king of the software biz which is trying to stay relevant as digital invades and transforms media. Old enemy Apple is encroaching on core businesses, won by focusing on usability. Google has beaten them by aggregating global audiences and changing how ads are sold.

What Microsoft lacks focus, they make up for in talent and critical core competencies like scale, global reach and relationships with multi-billion dollar corporations. Microsoft must reassert itself by positioning Silverlight and other key products as the technologies used by mainstream media and major corporations.

By investing in Move, Microsoft gets a partner with which to push their NextGen video technology to major media. Among its partners Move counts ABC FOX, and a growing number of international broadcasters. While currently most Move partners use ON2’s VP7 codec, there’s no reason they couldn’t switch to Silverlight and VC-1 at any time.

It’s interesting to consider the Move-Microsoft relationship in the context of larger working relationships with CDN Limelight, design firm Schematic, as well as Disney, FOX and a number of other mainstream media companies. Together these powerbrokers have formed something of an oligarchy in online video player development and content delivery which could become a front for Microsoft and other Adobe competitors.

So. Let’s recap 2008’s Olympics coverage. NBC got Microsoft to front a good portion of the development costs for a video platform that didn’t meet expectations, and they forced those who wanted to watch in high quality on-demand to view on Television or on Vista.

That’s good for NBC, their TV ratings have been stellar. While a lot of people watched online, most chose to watch on the main screen most of the time because the digital experience left a lot to be desired.

And it’s great for Microsoft which got its Silverlight adoption event, had no major issues with the Silverlight 2.0 release and received exclusivity over high quality downloadable VOD delivered by TVTonic to Vista machines only.

While some (or many) will whine about the fact that they could have done better, TV has penetration in 98.2% of U.S. homes, it’s still about making money and the Olympics is about selling ads. NBC Universal is part of a publicly traded company and unlike the BBC they’re in business for their shareholders.

We may be less than impressed with what was offered versus what might have been, but when it comes down to it NBC offered more HD television and online video coverage of a live event than anyone ever. They maximized their audience and their profit by using both mediums to their advantage, and if they can do that, why would they do anything else?

CNET Reports that Gutuit Media has filed suit against Microsoft claiming that Silverlight infringes on several of Gotuit’s patents. Woburn MA based Gotuit provides metadata management and video mashup services for a number of mid and large size companies. (See our previous coverage here)

Specifically, in a complaint filed in California Northern District Court on July 2, Gotuit claims that Microsoft is infringing by:

Using, Silverlight , metadata markers will be added to Olympic video, which will be re-broadcast with anindex, so that the viewing experience can be customized in order to match individual viewing preferences.

Due to the overall vagueness of the complaint, the complexity of the technology involved, and the ambiguity of digital media patents this will doubtless lead to many hours of litigation. Gotuit may not really expect to win, if they had a clear cut case they would have been more specific in their filing.

They’re simply looking for their share of the Olympics pie. Which makes the case a win-win, if you’re a technology lawyer.

Yeah, the title’s pretty bad but I’m coming off of a vacation so give me a break. Microsoft which has already announced numerous content deals for XBox Live this year announced today at E3 that they will will soon offer access to the 10,000 + titles in the Netflix streaming library to existing subscribers.

The blogosphere has been quick to declare this a blow to AppleTV, but the deal is more a case of two companies that were already already in bed together getting a little closer. Netflix has reportedly spent more than $40 million on development to create its streaming service using Silverlight, Microsoft likely fronted a substantial portion of that. Netflix CEO Doug Hastings is on the Microsoft board.

Content will be delivered by Limelight, another company with close Microsoft ties. Microsoft plans to roll out the service when their upgraded XBox live interface is released this Fall.

The service will also have a unique interactive component allowing multiple users to watch simultaneously, useful for when all those guys in their parents basements get tired of Halo and decide to watch Star Wars together.

Microsoft engineer Ashish Thapliyal has posted some roadmap information on upcoming Silverlight 2 releases (via Web Video Universe). Silverlight 2.0 Beta 2 should be released some time in May, with the RTM version planned at some point late this sumer.

Microsoft is likely planning that release just ahead of the Olympics which start on August 8, giving them a mass-adoption event and some additional momentum. Silverlight is currently being installed at a rate of 1.5 million downloads a day and Microsoft claims 85 partners to date.

Beta 2 should elevate Silverlight above just a plugin and spur development of some of the really exciting rich internet apps we have been promised.

Hollywood producer Peter Safran has signed a deal with Microsoft to create original content for the Xbox 360 reports the New York Times. Content will initially be short-form scripted programming, genres like comedy and horror that will appeal to Xbox Live’s 10 million strong audience.

Microsoft’s Scott Nocas termed the deal “the first of many.” Content will debut exclusively on 360, will be syndiacted across other Microsoft web properties thereafter, and will most likely be ad-supported, at least initially.

The deal will bring some new high-production value content to the Xbox live marketplace without Microsoft’s needing to pay the licensing fees required for some of their other premium content. The trick will be promoting it and building an audience from the ground up.

Eric Picard is clearly one of the smartest people around. Its no wonder he’s one of Microsoft’s online advertising thought leaders.

He’s providing an overview of manual vs. automated optimization, and the pros and cons of exchanges for both publishers and advertisers. Blind bidding is bad for both the advertiser and publisher.

As campaigns run, if campaign goals aren’t being met, there is a flood of data to review in order to make the appropriate changes to the marketing and creative mix. Just as goals can be translated into a media plan, they can also be translated into business rules for automation. The end result? An automated agency.

But is this a good thing? Lets turn to the panelists. However, ironically, there’s a technical snafu that held up Eric presentation, and could “de-optimize” the panel.

Strategy will continue to be done by humans. Execution and optimization will be automated. And, until we can track online ad exposure to offline conversions, we’ll still need people to place value on the media and its effectiveness in the real world.

Automation will provide more data to enable better decision making. But decision making should ultimately stay in the hands of real people. People who don’t have the strategic hat on will need to reconsider their role in the media buying and planning process.

While relationships are important, media is a commodity, and the media buying process should be more about supply and demand, and less on relationships. Automation can tremendously reduce the amount of sales friction in the buying process. The value of the impression is in the impression itself. When free markets are infiltrated by people who don’t understand the value of the media in the marketplace, people can artificially bid-up the value of the impression, which reduces the overall ROI on the marketing effort. Automated markets need to be smart, not just free.

“The most important, most valuable ad bought is the one that the buyer sees.”