Ericsson Buying Microsoft’s IPTV Business

Ericsson, one of the largest telecoms equipment manufacturers in the world, has announced the intention to acquire Microsoft Mediaroom, the IPTV business of the US software giant.

The deal will make the Swedish company a leading player in online video distribution, with a combined market share of over 25 percent. The price of the acquisition is currently unknown.

Meanwhile, Microsoft is expected to focus its content delivery strategy on the Xbox gaming console.

New kind of TV

Mediaroom is headquartered in Silicon Valley and employs more than 400 people worldwide. It is responsible for the technology that powers Internet television services by AT&T, Deutsche Telekom, Telefonica and Swisscom, among others.

According to Ericsson, the global IPTV market is estimated to reach 76 million subscribers in 2013 with revenues of $32 billion, growing to 105 million subscribers and $45 billion in 2015.

The Swedish company hopes that in the nearest future, 50 billion devices will be connected via broadband, and video distribution will have a similar impact on consumer behaviour as mobile voice had in the first years of the 21^st century.

“Mediaroom is the leading platform for video distribution deployed with the world’s largest IPTV operators,” said Per Borgklint, senior VP and head of Business Unit Support Solutions at Ericsson.

“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.”

According to Yusuf Mehdi, corporate VP of marketing, strategy and business for the Interactive Entertainment Business at Microsoft, the sell-off will allow the company to focus on consumer TV strategy for Xbox.

“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,” said Mehdi.

If the deal goes according to plan, Mediaroom will be incorporated into Business Unit Support Solutions at Ericsson during the second half of 2013.

In February, the Swedish telecoms manufacturer was chosen to build O2’s 4G network.

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