For ITV it's a sensible decision - their implementation of Silverlight was dreadful, but they clearly employed a bunch of people who didn't have a clue what they were doing when they had a brilliant platform already deployed for ITV Local (and they spent ten times more in developing their own platform). Broadcasters becoming technologists is a bad fit and is becoming worse as more of internet technology becomes involved. Now, perhaps, I won't have to wait three minutes for an ad to play, only to lose the whole show I was trying to watch, totally unable to return to the last point of viewing.
For Microsoft, it's a shame. This is a company with brilliant video technology - its VC1/Windows Media technology is far superior to Flash video in my view. It's been a true pioneer in video and the fact that an X-Box-based platform (XBMC) is the best open source IPTV platform on the market shows how mad this particular sector is.
But, a company that uses its biggest competitor's technology, Adobe Flash, for its own major video portal, MSN Video, cannot be trusted. This should tell anyone thinking of using Silverlight all they need to know. This is like Microsoft giving all its staff Google apps. Until Microsoft is confident enough to use its own technology, no one else should be willing to be a guinea pig.
Microsoft's woes in this area could be sorted very quickly and they could regain market share, but Microsoft is, in almost all areas of its business, lost in its own hype since it's been incapable of replacing a CEO who lost the plot a very long time ago...