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Ericsson buys Mediaroom

UPDATED 9/4/13: It’s official – Ericsson has formally agreed to buy Microsoft’s Mediaroom business, which has a dominant share of the global IPTV middleware market and delivers TV services on more than 22mn set-top boxes around the world.

The deal is expected to close in the second half of this year for an unspecified amount, whereupon Mediaroom will be integrated into Ericsson’s Business Unit Support Solutions division. It is currently unclear what plans are being made for the 400 Mediaroom employees based in Mountain View, California.

For its part, Microsoft says that the sale will enable it to dedicate all its TV resources to Xbox and make it a premium entertainment platform that delivers all the games and entertainment consumers want.

Yusuf Mehdi, corporate VP of marketing, strategy and business for the interactive entertainment business at Microsoft, added that the company plans to partner with content creators, studios, labels, networks, content aggregators, operators and distributors in order to pursue this aim.

Commenting on the deal, Per Borgklint, Senior Vice President and Head of Business Unit Support Solutions at Ericsson said the deal means that his company will be “powered with senior competence and some of the most talented people within the field of IPTV distribution”.

Rumours of the deal emerged in Bloomberg late last month, generating lots of discussion within the industry and predictions from some quarters that there will be more consolidation coming for the TV middleware market.

A sign of the growing irrelevance of integrated systems?

Rob Gallagher, Informa Telecoms & Media

Rob Gallagher, Informa Telecoms & Media

Speaking to us earlier today, Rob Gallagher, principal analyst and head of TV & broadband research at Informa Telecoms & Media (publisher of IP&TV News), observed that Microsoft now seems to be focusing more on consumer platforms like the Xbox as end-points for TV and video services.

“The whole concept of OTT delivery and how it has established itself as a viable means to deliver premium and commercial video means that the idea that you need a completely integrated system – the middleware, the networking equipment, and the devices – is becoming increasingly irrelevant,” said Gallagher.

“Even with Microsoft’s own plans, say around Smartglass, you can see that they plan to extend it to other operating systems. So I think it seems like a smart move for that reason.”

Treasure to some

Meanwhile, US research firm IHS believes that it was the allure of expanding its portfolio and offering a a complete, integrated IPTV solution that attracted Ericsson to the deal in the first place.

Daniel Simmons, senior principal analyst for TV technology at IHS, said: “With the company now able to offer IPTV network equipment, integration services and middleware, it is better positioned to serve the needs of leading telcos, especially as television transitions from a single-screen service to a multiscreen service.”

With 44 Mediaroom deployments in 21 countries around the world, serving more than 11mn households, Microsoft was recently estimated to control around a quarter (23%) of the world’s IPTV middleware market.

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