The move is not expected to produce any changes for subscribers to the television-based Internet service, the representative said. The company is not planning any job cuts as part of the move. The Mountain View, California-based unit that manages the WebTV service will report to MSN General Manager Mark Looi in Redmond, Wash., according to an internal memo. News of the changes at WebTV was reported earlier by the site Net4tv Voice, which tracks the interactive TV market and first published details of the Microsoft memo. "The primary focus of the Internet-on-TV team will be to deliver the key areas of the MSN service for TV-enabled devices," WebTV Networks boss Bruce Leak said in the memo addressed to employees. Besides the WebTV service, Microsoft also is using WebTV's technology in its soon-to-debut UltimateTV service. That offering combines interactive television, a digital video recorder, satellite TV and Internet access.Microsoft said that the group that develops the WebTV units will continue to be a part of the Microsoft TV operation, while UltimateTV will remain in Mountain View, headed by Leak.

Microsoft acquired interactive TV pioneer WebTV in April 1997 for $425 million. Although WebTV continued to grow after the acquisition, the number of subscribers eventually hit a plateau at about 1 million.

Former employees said in a series of interviews last October that conflicting goals and rising tensions eventually clouded the company's vision, stunted hardware innovation and ultimately led to one of the highest customer turnover rates on the Internet. In arrangement with India.CNET.com"Honestly, the WebTV folks really didn't want to be part of Microsoft," said a former senior executive from company headquarters in Redmond, Wash. "They had their own identity, their own vision, and they wanted to maintain it as separately as possible. The cultures were very different and hard to blend."

The conflicts often led to shifts in strategy and clashes between managers at WebTV and Microsoft. Not all of WebTV's failed promise, however, can be chalked up to Microsoft's handling of the start-up. In general, the dream of combining PC technology with America's favorite entertainment medium has been a nightmare. Gateway and Compaq have both released PC-television combinations that met with extremely slow sales. More recently, AOL Time Warner's AOLTV has received a tepid reception.