Microsoft has long planned a subscription service for TV shows and movies, and it's spent the last year trying bring media companies onboard. Now those efforts have broken down, according to a new report from Reuters. At issue seems to licensing fees; an unnamed senior media executive told the newswire, "They built Microsoft TV, they demoed it for us, they asked for rate cards but then said 'ooh ah, that's expensive.'" Redmond had planned on a monthly-fee subscription service similar to Netflix, but wanted to include currently running TV shows, giving it a media library similar to Hulu's, and also stream live networks. All that content meant a bigger paycheck to the media owners, and Microsoft apparently wasn't willing to pay it. At least not just yet.

According to Reuters sources, media companies hold out hope that negotiations will resume. Meanwhile, Microsoft will stay in the content distribution game with its Xbox Live and web partnerships, perhaps biding its time.