Much attention has been focused on Nokia’s efforts to move beyond its core hardware business and become an internet services company. Fellow Scandinavian behemoth Ericsson has no less ambitious plans to broaden its revenue streams and push its sphere of influence up the carrier food chain, but its own strategies rely largely on managed services, especially in the emerging markets for converged television and multimedia platforms.
Following a string of moves such as the acquisition of Tandberg, Ericsson has now announced a deal with television content provider Endemol, which suggests that content services may well prove to be a magic formula for the base station giant, as it seeks to reinvent itself as a fixed/mobile quad play enabler, rather than a mobile infrastructure vendor plain and simple.
The two companies will develop a platform, called Me-On-TV and based on an existing Endemol project, for mobile interactive TV and user generated content. It will enable any mobile device to upload, publish and share live or pre-recorded video via web sites, TV broadcast or other digital networks.
The main purpose of the deal for Ericsson is to add another managed service to its growing portfolio, increasing its chances of sealing up the entire operations of certain carriers as they look to outsource more and more key functions, from basic network operations to applications. Broadcasters, web site owners and mobile operators will be able to manage live and on-demand content directly using the outsourced service, and retaining their own brands. Ericsson will host the service, while Endemol will act as distributor, and will license the technology as an integrated service in existing and new TV and media formats. The company is already using the platform in its home country of the Netherlands.
‘This global partnership flags Ericsson’s commitment to establish a leading position in multimedia. It shows our partnership approach with innovators in complimentary fields to develop consumer solutions for multiple screens that can benefit media companies and operators alike,’ said Jan Wareby, head of Ericsson’s Multimedia business, in a statement.
This Multimedia unit is the heart of Ericsson’s move into multimedia services. It was set up early this year, shortly after the acquisition of Tandberg. At the time of the purchase, Ericsson CEO Carl-Henric Svanberg said: “IPTV for cable and telecom operators is the biggest networked multimedia opportunity going forward. Ericsson and Tandberg will create a leading player in networked media solutions for telecom, cable and satellite operators as well as media companies.”
Tandberg certainly gave Ericsson a valuable boost in the IPTV market, where it had been slow to formulate a clear strategy compared to rivals, but it has always seemed likely that the Swedish company would mainly use its new asset to chase the nascent mobile video market including mobile TV, multicasting and unicast TV services, and to create a managed platform optimized for mobile or fixed/mobile television rather than taking on the IPTV giants head-on.
We can expect further partnerships and acquisitions from Wareby’s unit as Ericsson moves multimedia content, especially managed services, to the heart of its growth strategy. The first deal enacted by Wareby, formerly executive vice president of marketing and sales at Sony Ericsson, was in February, when the Swedish company agreed a collaboration with Turner Broadcasting System International to develop mobile content from TBS’ various entertainment properties, including CNN International, Cartoon Network and Adult Swim. The service will be powered by Ericsson’s content management technology, and will be available both on- and off-portal. Although the early offerings are heavily WAP-based, the partners will use the launch to assess demand for mobile video services. The Turner deal is an example of the way Ericsson is now willing to adopt various new business models – in this case, it will act as a content broker between Turner and mobile service providers, pointing to a possible lessening of dependence on the operators themselves and a broader value chain for the vendor. However, the major benefit of such content deals will be to extend the company’s managed services business further, hosting such services regardless of the specific balance of the relationship with each customer or partner.