Ericsson buys IPTV platform Mediaroom from Microsoft

Microsoft declares its commitment to focus TV strategy solely on Xbox

Financial trends and news by Steven Loeb
April 8, 2013
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Fewer and fewer people are sitting down and watching television on their actual television these days. A survey from NPD this part August found that 18% of people are accessing online video on TVs on a daily basis, with some 25% accessing it several times a week, with movies driving much of that growth, Companies are in the midst of figuring out how best to give people to content they want, when they want it, in the way they want it. A deal was recently struck that should help two companies succeed in this growing market.

In an effort to refocus its television strategy, Microsoft is selling off end-to-end Internet Protocol television (IPTV) platform Mediaroom to Ericsson, it was announced Monday.

Terms of the deal were not disclosed, but it is expected to closing in the second half of this year. Mountain View, California-based Mediaroom employs more than 400 people worldwide, and there was no indication of what would become of these employees.

The deal will be mutually benefitial to both parties, with Ericsson gaining a greater share of the growing IPTV business, and Microsoft getting the chance to focus its TV strategy solely on Xbox.

With the purchase, Ericsson said, it will become "the leading provider of IPTV and multi-screen solutions with a market share of over 25%."  The global IPTV market is estimated to reach 76 million subscribers, and to bring in revenues of $32 billion, in 2013. Those numbers are expected to grow to 105 million subscribers and $45 billion in 2015.

"Ericsson's vision of the Networked Society foresees 50 billion devices to be connected via broadband, mobility and cloud. Future video distribution will have a similar impact on consumer behavior and consumption as mobile voice has had," Per Borgklint, Senior Vice President and Head of Business Unit Support Solutions at Ericsson, said in a statement. "This acquisition contributes to a leading position for Ericsson with more than 40 customers, serving over 11 million subscriber households. In addition, Ericsson will be powered with senior competence and some of the most talented people within the field of IPTV distribution."

For its part, Microsoft is selling Mediaroom in order to refocus its efforts on Xbox, the company explained in a blogpost.

"With the sale of Mediaroom, Microsoft is dedicating all TV resources to Xbox in a continued mission to make it the premium entertainment service that delivers all the games and entertainment consumers want – whether on a console, phone, PC or tablet. And with 76 million Xbox 360 consoles around the world with 46 million Xbox LIVE members, it is a mission that gets us out of bed in the morning," Yusuf Mehdi, Corporate Vice President of Marketing, Strategy and Business for the Interactive Entertainment Business at Microsoft, wrote.

Mediaroom was originally introduced as Microsoft TV and was renamed Microsoft Mediaroom in 2007. It enables pay TV operators to deliver TV services over the Internet. It powers television service providers like AT&T U-verse, Entertain of Deutsche Telekom, Telefonica, TELUS Optik TV and Swisscom. Mediaroom currently powers TV services on more than 22 million set top boxes in 11 million subscriber households.

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