Ericsson leads the market, acquires Microsoft's IPTV biz

Dataquest

Swedish telecom equipment maker Ericsson struck a deal to buy Microsoft Corp's Mediaroom IPTV business, as reported by Reuters.

Ericsson said it expected to close the deal for the business, which employs more than 400 people worldwide, during the second half of 2013. It did not disclose a purchase price, though a company official provided a ballpark figure.

"This deal is within the range where we previously bought a company called Optimi for $99 mn and where we also bought LG Nortel for $234 mn," said Ove Anebygd, vice president and head of TV at Ericsson. "So this is somewhere in between the 2."

Ericsson said the deal would make the company, already the world's biggest mobile networks maker, the leading provider of IPTV with a 25% market share. Microsoft said the Mediaroom platform was offered by more than 40 operators and powered 22 mn set-top boxes around the world.

Microsoft puts bets on XBOX
Microsoft entered the IPTV business in the mid-1990s. It never became a major source of revenue for the Seattle-based software maker as most growth in internet TV has come from widely available 'over the top' services like Netflix Inc (NFLX.O) and Hulu rather than internet TV supplied by phone companies.
The head of Microsoft's interactive entertainment business said Monday's deal allowed his company to "commit 100% of its focus on consumer TV strategy with Xbox."
From its beginnings at the turn of the century as an upstart rival to Sony Corp (6758.T) and Nintendo Co (7974.OS), Microsoft's Xbox has grown into the United States' best selling game center, with 76 mn now in use around the world. Xbox owners can now buy TV programs, films and music through Microsoft's own store, or access content through Netflix, and other suppliers.
Microsoft even set up its own studio last year to create original TV content, although it said on Monday it wants to "partner" with film studios, music labels, TV networks, and content aggregators to expand offerings on the Xbox.