Layer3 TV, the Denver-based next-gen cable operator, has been putting a fresh, new face on the much-maligned set-top box using a colorful and modular lineup of whole-home gateways.

While the industry has known for a while that Pace plc, the U.K.-based set-top maker now part of Arris, was tapped to make at least the first wave of Layer3 TV boxes, the MVPD revealed Tuesday that Designworks, a subsidiary of BMW Group, designed the whole-home gateway exclusively for Layer3 TV.

The use of modular color schemes, the companies said, is a first for cable in that it provides a way for the devices to "best fit into each room’s aesthetic" of the subscriber. 

This video offers a more detailed look at the different colors supported by the design: 

Layer3 TV’s main Gateway box supports HD, 4K and High Dynamic Range video, integrated WiFi, a DOCSIS 3.0 modem, and whole-home DVR that can store more than 3,000 hours of HD, integrates access to certain OTT apps, and features a Full Color Front panel LCD screen that displays info about what’s being watched. It’s also Zigbee and Bluetooth-ready, the company said.

RELATED: Layer3 TV Goes For The Big Bundle

Layer3 TV and BMW Group have connected elsewhere, as the pay TV provider uses a fleet of electric BMW i3 vehicles for installations and other service visits. Layer3 TV has also been using Tesla vehicles for its partnership with NextLight, a municipal service provider that is building out a city-wide fiber network in Longmont, Colo.

RELATED: Layer3 TV's Fleet Goes Green

“Designworks and the BMW Group have a long history of designing high end and intuitive products that customers love using every day,” Layer3 TV CMO Eric Kuhn, said in a statement. “After conducting an exhaustive global search for a design firm, we were attracted to the firm’s commitment to combine elegant design with tangible improvements to how media is experienced.”

“The user experience is at the heart of what we design for at Designworks, whether we are working on aviation interiors, user interaction concepts or solutions for the smart home” said André de Salis, creative director and project lead for Layer 3 TV at Designworks.

Layer3 TV has launched service in Chicago, Washington, D.C., parts of Los Angeles, and Longmont, Colo.

RELATED: Layer3 TV Launches in La La Land

Espial, a Canada-based company that specializes in multiscreen video interfaces and software clients, is deepening its IP video expertise and adding hosted cloud video capabilities via a deal to acquire Arris’s Whole Home Solution (WHS), a multi-room video and apps platform that supports traditional TV services as well as over-the-top content.

Financial terms were not announced, but the deal includes WHS’s infrastructure, client and server software products, a development and operations team primarily located in Kirkland, Wash., and a network operations center and two WHS cloud data center operations.

Update: During a conference call about the deal, Espial execs emphasized that it will enable it to push a strategy centered on a video-as-a-service platform rather than on hardware and set-top boxes. Notably, Arris will continue to provide media gateways, set-top boxes, support and solution deliver for the Whole Home Solution. 

Arris’s WHS was spawned by its $20 million acquisition of the Digeo set-top and software business from Paul Allen in 2009, and later extended a bridge to third party apps through what it called the “Arris Market.”  Examples of MSOs that have deployed Arris’s WHS include Shaw Communications, WideOpenWest, Buckeye CableSystem, EastLink, Comporium, Consolidated Communications and Service Electric Cable TV.

Espial said it will support current roadmaps, and look to accelerate future product roadmaps, for more than 40 service providers that use WHS in the U.S., Canada and Latin America.

They expect to close the deal in Q3 2016. After which, Arris said it will continue to work with Espial to support WHS with join integration and co-marketing activities. They also intend to establish a reseller agreement, noting that they worked together on the development of a 4K-capable platform launched this month by Portugal-based cable operator NOS that relies on the Reference Design Kit (RDK), a preintegrated software stack being managed by Comcast, Liberty Global and Charter Communications (via Charter's acquisition of Time Warner Cable).

Arris’s sale of the WHS product line and associated assets comes more than six months after it acquired U.K.-based set-top maker Pace plc. Arris acquired Motorola Home in April 2013.

“WHS expands our solution portfolio with a cloud-hosted Video-as-a-Service platform that is complimentary to and will leverage Espial’s current solutions for next-generation IP video services,” Jaison Dolvane, Espial’s CEO, said in a statement.

“Combining the WHS technology and ARRIS team with Espial will broaden the capability of the overall organization and accelerate the pace of innovation,” added Bruce McClelland, president of Arris’s Network & Cloud and Global Services unit. “ARRIS will continue to focus our R&D investment on the greater broadband and video ecosystem, dedicated to enabling next-gen entertainment and communication experiences that are connected and personalized.

“We’re excited about the future of the WHS solution and look forward to working with Espial and ARRIS to enhance it further,” Cash Hagen, WOW’s CTO, said. 

Notably, WOW has begun to deploy a new hybrid QAM/IP platform in partnership with Evolution Digital and TiVo for a service called “SW!VEL” that includes the broadcast basic channels and integrated OTT apps. WOW is using that product to target a segment of the market that wants a slimmed down pay TV package, while continuing to market its full-freight HD-DVR offering with the Arris Whole Home Solution, which also supports integrated OTT apps.

SeaChange International has paid $8 million in cash to acquire DCC Labs, a Warsaw, Poland-based software developer and integrator for set-tops and multiscreen devices that, SeaChange said, will also strengthen its Reference Design Kit (RDK) product strategy.

SeaChange said it closed the deal on May 6 and expects DCC Labs to contribute “an additional several million dollars of revenue annually,” with an anticipated one-year payback through synergies and cost savings that SeaChange will begin to realize immediately. The transaction also includes a lock-up provision for the SeaChange stock that unwinds over a three-year period, the company said.

It said the deal will also help SeaChange to optimize the operations of its In Home business, which includes the SeaChange Nucleus home video gateway. DCC Labs has also developed a  software stack for Europe’s DVB (Digital Video Broadcasting) community and an HTML5 framework for user interfaces.

In conjunction with the acquisition, SeaChange said it has also started a workforce reduction within its In Home engineering and services organization that aims to achieve $8 million in annualized cost savings. DCC Labs CEO Marek Kielczewski, meanwhile, has joined SeaCahnge as SVP of consumer premises equipment software and will lead the SeaChange In Home division.

Shiva Patibanda, formerly CTO and GM of in-home products at SeaChange, left the company last year and recently joined Ericsson’s TV and media group.

SeaChange said DCC Labs has more than 70 engineers and has won projects supporting millions of set-tops, mobile devices and smart TVs, and has development expertise that includes Android and  Linux operating systems as well as the Reference Design Kit (RDK), the preintegrated software stack for set-tops and broadband devices that’s managed by Comcast, Time Warner Cable and Liberty Global.

SeaChange and DCC Labs have a business history, as SeaChange engaged with the Warsaw-based company last year to support a major set-top development project for a “large European cable operator” that resulted in deployment of a user interface and an RDK 2.1-based home video gateway for field trial tests within four months of the initial engagement. SeaChange said it also tapped DCC Labs to assist with improving quality and providing enhancements for another European cable operator’s deployed home video gateway.

“Through our successful collaboration in the field, SeaChange determined that DCC Labs’ experience and strengths are exceptionally well-aligned with our strategy to operate more efficiently and rapidly roll out high-value, front-end product innovations,” Ed Terino, the company’s recently named CEO, said in a statement. “SeaChange is now better positioned to serve the global RDK licensee community, as well as fulfilling service providers’ growing desire to focus on a select set of vendors to support their video infrastructure from the back-end all the way through to set-tops, mobile devices and the subscriber experience.”

Set-top and video software specialist Alticast has hired Nara Won to the post of vice president, business development and strategy for the company’s operations in the Americas region.

Won  most recently was VP of business development for Humax Americas, responsible for the company’s cable industry business activities, including the rollout of set-tops, gateways, media hub and Internet of Things products.  He’s also late of Texas Instruments, and earned Bachelor’s and Master’s degrees in Computer Science from the Korea Advanced Institute of Science and Technology (KAIST).

“Nara Won will play an integral role in addressing our work with operators in the North American and LATAM markets,” said John Carlucci, president and CTO of Alticast US.  “His strong engineering background, his proven ability to understand industry trends, and his focus on addressing customer needs all will help us capitalize on next-generation video opportunities.”

Alticast’s Americas unit also promoted  Jae Park to vice president, business development, and Mike Fallon to vice president, technical service.

Offering another clear signal that the set-top box business is tough sledding, chipmaker STMicroelectronics said it will scuttle development on new platforms and standard products for set-top boxes and home gateways and apply a bigger focus on silicon for connected cars and the broader Internet of Things sector.

The decision, said COO Jean-Marc Chery, to discontinue those products “is the result of an extensive review of various options” that originated last May.

The bug-out also cedes more of the STB chip market to competitors such as  Broadcom Corp., Intel Corp. and MaxLinear.

It also appears to be a blow to the emerging DOCSIS 3.1 market. STMicro had D3.1-based cable modem products in development and was considered to be key third supplier for that silicon beside Broadcom and Intel, which has been teaming with MaxLinear on DOCSIS chips.

STMicro has been asked to clarify if its decision to get out of the STB and gateway chip-making business also means the end to its DOCSIS 3.1 endeavors.  Multichannel News will update this story when the company responds. However, the company does list "DOCSIS Solutions" under the "Digital  Set-Top Box ICs" product category. 

Chery cited a slow market and M&A delays at operators and at box makers, as well as increasing competition on low-end boxes and high R&D costs as contributors to STMicro’s ultimate decision.  “And losses are unsustainable – about a half a billion dollars cumulatively in the last two years,” the exec noted.

The chipmaker’s move comes amid big shifts in the set-top market marked by consolidation and a shift toward gateway-client architectures and the virtualization of STB functions in connected devices such as smart TVs, streaming players, tablets and smartphones. On the M&A front,  Cisco Systems sold its STB business to Technicolor, and Arris, the world’s top STB supplier, recently closed its acquisition of Pace Plc.

And the decision will impact STMicro’s employees. The company said it will “redeploy” about 600 employees currently associated with STMicro’s set-top-box business to support its digital automotive and microcontrollers businesses.  That could ultimately affect about 1,400 employees worldwide -- 430 in France through a “voluntary departure plan,” about 670 in Asia and about 120 in the U.S.

STMicro expects the moves to save about $170 million per year and result in restructuring costs of the same amount.

Offering a possible view into how Altice Group's future tech strategy might play out as it prepares to enter the U.S. market, its SFR unit in France has introduced a new, souped up gateway, initially for FTTP networks, and a multiscreen subscription VOD service for its fixed and mobile platforms.

And there are other big changes on the horizon, as Altice, which has deals in place to acquire Suddenlink  Communications and Cablevision Systems, reportedly will drop the Numericable and Virgin brands in France and put everything there under the SFR banner. Additionally, 62 Numericable stores will be closed, and six will be rebranded under the SFR banner, Génération Câble reported.  

“The group’s premium offers will be carried by a single brand for fixed and mobile, SFR, which is better adapted to the group’s strategy,” Altice said in a recent memo, according to Le Parisien. “The Numericable brand will first be dropped for new customers and eventually for the installed base, with the aim of migrating customers towards SFR.”

The company has also launched Altice Labs, according to Génération Câble, which was live tweeting an Altice meeting held November 9 in Paris featuring chief exec Dexter Goei and Michel Combes, the recently named COO of the group. Altice has also established a procurement company for the entire group that will negotiate with suppliers.

Back to the product-facing activity, SFR is set on November 17 to launch “Box Fibre Zive,” a new set-top box/gateway that bake in a 1-Gig fiber modem, eight tuners, a new UI, a show “restart” function,  support for 4K/Ultra HD video, integrated NFC and Bluetooth, 802.11ac WiFi, and a 500 gigabyte hard drive.

The box, which will be available to 7.4 million eligible connections will also let subs integrate and control other devices, such as Chromecast dongles, gaming consoles and Blu-ray players, through an HDMI pass-through capability.

The combo, “gives the set-top box a central role in the household,” the operator said. A key objective is to establish an “open ecosystem of innovation and strategic partnerships,” an industry source added.

On the content end, SFR is also launching Zive, a multiscreen SVOD service that will offer a library of more than 5,000 HD shows (with a roadmap to 15,000 by the end of 2016), and almost 600 in 4K/UHD and be available exclusively to its fixed-line and mobile customers.

The SVOD product, which will launch by end of year for  €9.99  (US$10.73) per month, will present titles in four categories: Kids, Series, Cinema and Fun – and offer content from studio partners such as Disney/Pixar, ABC Studios, Viacom, Mediatoon, Warner Bros, Europa, Miramax, Sony Pictures Television, and France Télévisions.

Additionally, Altice's Portugal Telecom unit is pushing a plan to build over 18,600 miles (30,000 kilometers) of fiber optic cable in five years, passing an average of 600,000 homes per year, or 3 million homes by 2020. When completed, the network will reach 5.3 million homes (2.3 million now, plus 3 million more by 2020). 

PT said the resulting network, which will enable new NGPON2 technology to coexist with legacy GPON, will evolve from 2.5 Gbps down by 1.25 Gbps upstream, to deliver symmetrical speeds of 40 Gbps and 80 Gbps, the company said.

In France, the Altice said it will extend fiber to 12 million homes passed by the end of 2017, 18 million homes passed by the end of 2020, and 22 million homes passed by the end of 2022. 

Arris shares were down more than 10% in after-hours trading Wednesday after the tech giant said Q3 revenues dropped 13.1% due in part to sluggish set-top and gateway sales to Verizon Communications and AT&T, which just combined with  DirecTV.

Arris chairman and CEO Bob Stanzione cited “shifting” strategies at those telcos. AT&T, for example, saw a decline in U-verse TV subs in Q3 as it applied more focus on selling DirecTV service.

That shift in focus “hurt our business pretty dramatically,” Stanzione said.

Arris, which is also dealing with declines outside the U.S., posted Q3 revenues of $1.22 billion, off from the $1.24 billion expected by analysts, and posted earnings of 56 cents per share, down from 81 cents in the prior year- period. Looking ahead, Arris anticipates revenues to decline to $1.1 billion to $1.15 billion, alongside adjusted net income per diluted share of 40 cents to 45 cents, citing lower expected U.S. revenue, near-term M&A uncertainty and international growth tempered by the strong U.S. dollar.

Driven by the aforementioned telco issues, CPE segment sales dropped 14% versus the year-ago quarter, despite improved cable CPE sales and a record sales of broadband gateways and modems via retail channels.

Arris also talked up its role in supplying an advanced DOCSIS gateway to Comcast – the DOCSIS 3.0-powred XB3 will bond up to 24 downstream channels and integrate MoCA 2.0 and 802.11ac WiFi.

On the video CPE end, unit volumes dropped 11% year-on-year. A bright spot was the launch of a next-gen video gateway (the DCX3635) for Canada’s Shaw Communications that supports both Arris’s own Moxi platform and Comcast’s X1 platform. Shaw is trialing X1 after ditching its original IPTV migration strategy. 

On its fiscal Q4 call earlier this month, Shaw CEO Bradley Shaw said the MSO had launched the whole-home DVR platform with the Moxi UI, noting that it’s “forward compatible with the X1 service.” He said Shaw’s anticipates that the commercial launch of X1, which will be powered directly by Comcast infrastructure, will occur during Shaw’s 2016 fiscal year.

On the network side of the business, Arris saw sales of its flagship E6000  CCAP drop from the first half of the year (Shaw is a new customer for it), but remains on track for Q4 customer field trials of DOCSIS 3.1, according to Bruce McClelland, president of the company’s’ network and cloud unit. Arris also expects formal CableLabs D3.1 testing to start during the current quarter.

Regarding Arris’s pending $2.1 billion acquisition of U.K.-based Pace, Stanzione said he’s still enthusiastic about the benefits of the merger, and remains committed to getting the deal done. Amid additional requests from the U.S. Department of Justice and other regulatory entities, Arris now believes it will wrap up the merger by late December or the first quarter of 2016. Arris has also indicated that regulators might apply a condition to the deal that Arris divest part of its optical transmission business.

Arris and Pace shareholders have approved the deal.

Signaling more vendor consolidation in the sluggish set-top box market, U.K.-based Amino Technologies has inked a deal to acquire Entone Inc. for $73 million ($65 million in cash).

Both suppliers make and sell IP-only and hybrid set-tops and gateways.

Cupertino, Calif.-based Entone, which also sells WiFi adapters and other types of accessories, has been particularly successful in the independent tier 2/3 service provider market using a platform that mixes traditional pay TV and over-the-top video, but has also secured footholds with majors.  Entone, which has also promoting an “legal” Aereo-alternative under which its FusionTV service combines over-the-air and over-the-top video services, has notched recent wins with Vodafone Netherlands, Three River Communications, mobile operator TIM Brasil, and Volia, a Ukrainian cable operator. In 2013, Entone and TiVo announced an agreement to jointly pursue IPTV deals that would also clear the way for Entone to combine TiVo with boxes with or without local DVR storage and focus on the delivery of cloud-based apps and services. 

Privately-held Entone, which has more than 150 customers globally, pulled in revenues of $43.4 million in the fiscal year ended June 30, 2014, and EBITDA of $3.9 million. In the 11 month period from May 31, 2015, Entone generated revenues of $46.7 million and EBITDA of $5.1 million. Entone had net cash of $12 million and net assets of $15.9 million as of May 31, 2015.

Amino said the deal will help it boost its global footprint and scale while also removing a direct competitor from the market. It expects financial synergies of about £1.0 million (US$1.5 billion) in the full year after the deal is closed. They expect to close the deal in the third quarter.

Scale is also a driving reason behind Arris’s proposed $2.1 billion acquisition of Pace Plc, the U.K.-based maker of set-tops, video software and broadband access gear.

"The proposed acquisition of Entone has the potential to transform our business and broaden our capabilities and market reach globally across IPTV, hybrid broadcast and a range of connected home solutions,” Amino CEO Donald McGarva said in a statement, claiming the deal also aligns with Amino’s recent buy of cloud-TV platform provider Booxmedia.

"Bringing together Amino and Entone would create a significant new presence in the pay-TV market with solutions and skillsets that are highly complementary,” added Entone CEO Steve McKay. “We share a very similar vision as to how our industry is changing and the kinds of solutions that are required to address both existing and new customers."

Canaccord Genuity has been appointed as financial adviser and joint bookrunner in connection with the acquisition.

Kansas City, Mo. -- A growing number of small and independent cable operators are preparing to get rid of the very product that once drew customers to their business: TV programming.

With the wholesale price of programming increasing at a rate far higher than the retail cost, many operators attending The Independent Show here are generally ready to get out of the programming business and instead allow customers to pick and choose programming services with an IP, or over-the-top system.

At a panel titled “IP is the Future – Are you On Board?” at the annual convention of the American Cable Association and the National Cable Television Cooperative, operators focused on an option of making broadband the core product and allowing customers to deal directly with programmers.  Steve Weed, CEO of Wave Division Holdings, said smaller cable operators are focused on building -- and maintaining --  a gateway to the home that allows over the top players such as Netflix to be delivered to cable customers. Wave Broadband currently uses the Tivo platform, which features Netflix.

For its part, Cable ONE said it has inked a deal that will enable its customers to access Netflix directly through TiVo-powered HD-DVRs that it leases to subscribers.

“We don’t make any money on video,” said Weed, noting the 14% of gross margin on subscription video business, essentially passing along content to customers at cost. “We have a big incentive to get out of that.”

With the current wave of consolidation evident in several announced deals -- Comcast/Time Warner Cable; AT&T/DirecTV: 21st Century's offer to Time Warner -- panelists agreed that big mergers will accelerate the likelihood that basic-cable packages could go over-the-top.

“You’ve got this huge force of traditional media players,” said Jimmy Schaeffler, chairman of the Carmel  Group.  “They are getting more and more control and squeezing your margins harder and harder. They’re making it tougher and tougher to hang on to that video that you have…..”

Because programming rate increases, said Weed, are the No.1 complaint from customers, smaller cable operators would do better getting rid of their traditional TV video product and instead focusing on providing a gateway to the home that connects all the services – phone service, home automation, security – and helps “manage the complexity” for customers.

Regardless, broadband is expected to play an increasingly larger role as a product offering.  Schaeffler predicted a big part of small ops’ future is the Internet of things.  He reminded the audience that Mediacom Communications is working with John Deere to investigate the extension of high-speed broadband in rural Iowa to provide connectivity for automated farm machinery. Mediacom wants to improve agricultural efficiency by connecting commercial farming operations (and John Deere equipment) with wireless broadband services. 

“The Internet of things will proliferate and many of you will be in the middle of it rural America” said Schaeffler.  Younger users will continue their craving for more broadband in time, he said. “You have a pipe they will scream for, “ he said.