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Acquisition secures Ericsson's lead in IPTV space

Posted: 11 Apr 2013     Print Version  Bookmark and Share

Keywords:IPTV  set-top box  Ericsson  Mediaroom  pay-TV 

Ericsson will dominate the Internet-Protocol Television (IPTV) set-top box (STB) middleware space after its acquisition of Microsoft Corp.'s Mediaroom properties. Market analysis firm IHS forecasts Ericsson to not only lead the market, but the company will enhance its competitive advantage over its rivals by expanding its IPTV offering into a complete integrated solution.

In 2012, Ericsson 1 per cent share of the worldwide installed base for IPTV STB middleware, according to the IHS TV Systems Intelligence Service at information. Meanwhile, Microsoft?s Mediaroom was the market leader, accounting for a 20 per cent share. Following the acquisition, Ericsson would have a 21 per cent share of the market, based on the 2012 rankings, giving in a 7 percentage point lead over the next largest third-party supplier player, UT Starcom. The company also would have a 3 point lead over proprietary solutions from STB makers.

This gives Ericsson a commanding position in an IPTV STB market that is expected to more than double in the coming years, with IPTV STB industry shipments rising to 158.4 million units in 2016, up from 76.3 million in 2011. IPTV represents the fastest-growing segment of the pay-TV market, with a 16 compound annual growth rate (CAGR) in homes served through 2016.

However, beyond market share, the purchase of Mediaroom also gives Ericsson other important advantages in this booming market.

"With the acquisition of the largest IPTV middleware provider, Ericsson now becomes the leading IPTV STB middleware provider, serving a fifth of the world?s IPTV homes," said Daniel Simmons, senior principal analyst for TV technology at IHS. "Just as importantly, Ericsson now can expand its IPTV offering into a complete, integrated solution. 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."

Middleware is becoming a key area of innovation and competition in the STB market, managing the communication between the head end and the STB. It also provides the user experience, which is an increasing point of differentiation among pay-TV operators. Middleware plays a key role in allowing STBs and multimedia home gateways to serve content to all kinds of IP-connectable devices, including today?s increasingly popular mobile devices such as media tablets and smartphones.

Mediaroom in the middle
Prior to the acquisition, IHS had forecast Mediaroom?s installed base would rise by a 10 per cent CAGR between the end of 2012 and 2016. However, the overall IPTV market is projected to add households at only a 16 per cent CAGR during the same period, which means that Mediaroom?s market share is actually forecast to decline to 17 per cent by the end of 2016 given that growth in China outpaces the IPTV growth in the developed markets that Mediaroom predominately served by Mediaroom.

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