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Microsoft to Monetize Skype With Video Ads

Microsoft Corp. (Nasdaq: MSFT) and Skype Ltd. plan to use video advertising to monetize their Skype-powered video chat on future Windows Phones and PCs. (See Microsoft to Buy Skype for $8.5B and Skype Gives Microsoft a Much Stronger Voice.)

Microsoft CEO Steve Ballmer said the two companies were looking to partner on video ads even before Microsoft decided to buy Skype. It's one of the biggest opportunities they see moving forward, said Skype CEO Tony Bates, speaking on a conference call Tuesday.

Bates said video-based ads will have a 45 percent compound annual growth rate in revenues over the next few years, growing from an admittedly small base, especially in the United States.

"We just started in ads," Bates said. "We have the ability in the Windows client to put a home page takeover type ad. There will be a number of other things. ... We think advertising is a very powerful monetization stream for us."

Microsoft will provide the sales force, and Skype will bring its 663 million strong user base to the partnership. Bates said that they will approach the market from a rich-media perspective with pop-out ads and animated spots, an experience he believes will fit the user base, which is used to immersive experiences.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 5:05:41 PM
re: Microsoft to Monetize Skype With Video Ads

Even if you're audience likes "immersive experiences," that doesn't mean they'll like ads that (or any) way. I've heard lots of mobile ad vendors pitch making the ads fun as a way to make consumers like them. I understand why Skype will need to use ads, but I hope they implement them well.

millomar 12/5/2012 | 5:05:37 PM
re: Microsoft to Monetize Skype With Video Ads

As a long time user of Skype, I was using version 1 of their software, the long journey into the arms of Microsoft should have been obvious.  A simple clean and reliable program has bloated and flaky.  Just right for the MS stable!


Over the years I have used SkypeOut quite a bit, up to ~$100 pa.  So I guess that I am one of the profitable customers.  But the non-payers are one of the reasons why we stay.  Network externalities figure prominently.


I have tried SkypeIn.  It works but I could see no real value.


If they are going to go the advertising route I would hope that they would also have a premium no-advertising subscription at around $2 per month outright or $5 per month but as a credit against SkypeOut.

ycurrent 12/5/2012 | 5:05:34 PM
re: Microsoft to Monetize Skype With Video Ads

Would be cool if the video ads during skype calls were viewed by both participants in the call - instant interactivity/shared experience.

shygye75 12/5/2012 | 5:05:33 PM
re: Microsoft to Monetize Skype With Video Ads

Ads in your face = $$ + jobs


It's easier to ignore an ad than an empty stomach.

Pete Baldwin 12/5/2012 | 5:05:33 PM
re: Microsoft to Monetize Skype With Video Ads

ycurrent -- I do understand what you mean, and I suppose there are times when that might be fun.... but in general, I can't consider it "cool" to have even more advertising thrown at my face.

shygye75 12/5/2012 | 5:05:32 PM
re: Microsoft to Monetize Skype With Video Ads

I'm sure you can find ad-free options for phone service, at the right price.

Pete Baldwin 12/5/2012 | 5:05:32 PM
re: Microsoft to Monetize Skype With Video Ads

Not every job depends on ads, Dennis.  I realize ads pay part of my salary, but I'm in the media business.  I expect ads there.  I don't expect them -- or want them -- on my phone calls.

tooltimer 12/5/2012 | 5:00:21 PM
re: Microsoft to Monetize Skype With Video Ads

Then I will stop paying to use Skype....

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