Ericsson’s acquisition of Microsoft Mediaroom will usher multiscreen capabilities to the market’s leading IPTV platform and, according to one analyst, bring some love back to a product has been neglected in recent years.
Financial terms of the deal were not disclosed. Speculation before the deal was formally announced pegged it at more than $1 billion, but Ove Anebygd, vice president and head of TV at Ericsson, told Reuters that the price was in the range of $99 to $234 million. The deal is expected to close in the second half of the year, with Mediaroom, which employs about 400, to be folded into Ericsson’s Business Unit Support Solutions division.
Once consummated, the deal will make Ericsson the largest supplier of IPTV middleware. According to research firm IHS, Ericsson would have a 21% share of a fragmented market, giving it a 7% lead over UT Starcom and a 3% jump on proprietary systems from set-top makers (see chart). Microsoft Mediaroom powers more than 22 million set-tops via deployments with such customers as AT&T U-verse, Deutsche Telekom, Telefonica, TELUS Optik TV and Swisscom.
The 2.0 version of Mediaroom supports multiscreen but has not scored much adoption, keeping Mediaroom relegated to a set-top-locked platform. Ericsson aims to integrate its own multiscreen product with Mediaroom and create a unified, nextgeneration IPTV platform, according to Ericsson head of TV marketing Simon Frost.
The deal will not just be good for Ericsson, but for Mediaroom customers upset with the lack of attention it’s been getting from Microsoft, Colin Dixon, chief analyst and founder of consulting firm nScreenMedia, said. U.K.-based provider BT, for instance, dumped Mediaroom last year in favor of a Linux-based client and signed on Comcast-owned subsidiary thePlatform to help manage its IP video service.
“It’s getting no love,” Dixon said of Mediaroom. “It’s seriously been neglected. It’s not central to what Microsoft is doing. Xbox is,” he said. “Ericsson’s core business is telco. They are best able to take [Mediaroom] and grow it going forward. Microsoft isn’t focused on the telcos in this way.”
Shedding Mediaroom will let Microsoft “commit 100% of its focus on consumer TV strategy with Xbox,” noted Yusuf Mehdi, corporate vice president of marketing, strategy and business for the Interactive Entertainment Business, in a blog post about the transaction.
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