Like vultures hovering above a corpse, Ericsson’s rivals have been hanging around waiting for former Mediaroom customers to lose faith in their migration path and then pounce with their alternative multiscreen platforms.
This is a long running saga dating back to the days when Microsoft still owned the Mediaroom IPTV middleware well before its sale to Ericsson in 2013, but lately the story has taken a new turn amid speculation over its owner’s possible sale of the pay TV business. The original picture was one of Microsoft’s neglect for Mediaroom at a time when it was refocusing on OTT and its Xbox gaming platform, which was precisely why it put the middleware up for sale.
Mediaroom was born out of technology acquired from a long defunct online service called WebTV, which after enhancements, was christened Mediaroom in 2007. At first it was a roaring success as the stand out platform at a time of rapid growth for IPTV and gained a number of tier 1 Telco customers, including BT Vision, Deutsche Telekom, AT&T, Swisscom, CenturyLink, Telus, Bell Canada, Hargray, Singtel, Telefónica and Portugal Telecom.
The platform went down well with users too in the early days, recalling the high satisfaction ratings of AT&T’s U-Verse service for example. It had a straightforward EPG with a lot of features that were cutting edge at the time, such as HD-channel recording, picture in picture, and ability to stream shows to other secondary boxes around the home. The irony was that Mediaroom initially looked well placed to carry its customers forward towards OTT, but fatally the platform stagnated as its features became mainstream.
There was a version 2.0 announced at the Consumer Electronics Show in January 2010 but this merely highlighted Microsoft’s growing neglect with a paucity of innovation. When Ericsson bought it, it was initially welcomed as a savior by some Mediaroom customers, even though it was clear that it was more interested in the customer base, than the underlying technology, which was still a pure IPTV platform delivering programming to standard TVs via set tops in a traditional walled garden approach. One obvious weakness was that it could only support a tiny VoD catalog.
Reflecting inertia perhaps the Mediaroom customer base was still largely intact, with the only two notable defections being Swisscom and, as we were first to report in February 2012, BT Vision.
Ericsson also stalled initially after the acquisition, losing further valuable time in upgrading the platform. Fortunately for Ericsson these were early days in terms of OTT for many of its customers which gave the platform, or rather the proposed migration strategy, the benefit of the doubt for the time being. The delayed response partly reflected Ericsson’s lack of immediate expertise or tools to extend Mediaroom to multiscreen, which provoked the acquisition of 40 man US start up, Azuki Systems in February 2014 to fill that gap.
Azuki was chosen because it had the multiscreen components Ericsson was looking for, including support for monetization as well as the User Interface (UI), personalization, content protection and discovery. It also supported the main pay TV platforms and was ready for integration into Mediaroom Reach, Ericsson’s extension of Mediaroom designed to placate customers while it worked on a longer term multiscreen migration strategy around its OTT platform which id dubbed MediaFirst.
Mediaroom Reach incorporated some multiscreen capability with restart TV integrated into the core offering, as well as better content discovery and support for the HEVC codec.
Ericsson had already decided Mediaroom had stagnated for too long and was too much caste in the IPTV era, to be upgradeable to a competitive platform for new customers. It had already lost Swisscom because the operator had lost faith in its future and decided to migrate to a more flexible in-house platform, admittedly a step too far for many customers.
That was why Ericsson developed MediaFirst both as an eventual destination platform for Mediaroom sites and to compete for new multiscreen customers. Ericsson claimed that those Mediaroom customers facing strongest competition or churn to upstart OTT rivals were contemplating immediate migration to MediaFirst, with the hope others would follow.
MediaFirst appeared to be modelled on Android TV in that programs can continue showing in the background while current favorites and recommendations or just available programs are shown in transparent overlays. It can integrate linear channels with VoD and OTT content within a UI, making it more compelling than UIs available through many legacy pay TV services. That has proved good enough at least to win the first major scalp announced just before this year’s IBC in September 2017, Japan’s largest cable operator Jupiter Telecommunications for its emerging multiscreen offering serving 3.7 million subscribers.
It remains to be seen whether this endorsement will help persuade the Mediaroom base that this is their best route to multiscreen or to facilitate their migration from multicast constant bit rate IPTV to adaptive bit rate (ABR) streaming.
It has certainly not stopped Cisco raising the ante with an initiative to move Microsoft Mediaroom customers onto its Infinite Video Platform (IVP), which is a multiscreen service delivery platform rivalling MediaFirst.
At this stage it looks like IVP has leapfrogged MediaFirst in capability after incorporating components from an impressive array of partners. Cisco decided to go with the flow and make Android TV its primary middleware through collaboration with Google to integrate it tightly and enable access to apps through Google’s PlayStore. It is also offering the Adobe Experience Cloud as a scalable monetization solution, including integrated dynamic advertising insertion capabilities and analytics covering both operations and audience data.
It is working with Amino, Zenterio and one or two others specifically to provide a migration path for operators with legacy IPTV architectures to ABR and OTT platforms, singling out Mediaroom. A key selling point is the ability to reuse legacy boxes while being able to migrate all subscribers at a single stroke rather than leaving some stuck with Mediaroom for a while longer.
What is not absolutely clear is whether these wavering Mediaroom customers are more concerned over the MediaFirst route or the uncertainty created by Ericsson’s clear intention of selling off its media business. These are more than just rumors, since Ericsson undertook a review of its global portfolio and overall strategy early this year, CEO Börje Ekholm, appointed to the role in October 2016, admitted that the group had spread itself too thin and should consolidate around core activities. He declared in March 2017 that the company would “pursue strategic opportunities” for its media business, without elaborating. Ironically Cisco has since emerged as a possible buyer for the media business, but then the Jupiter Communications win might just persuade Ericsson to hang on to its pay TV business.
On the other hand Ericsson is still under the cosh from China’s Huawei and a resurgent Nokia among others, leading to sharp decline in revenues. In Q2 its largest operating segment, Networks, reported a 14% decline in sales and a net loss of 1.0 billion Swedish krona ($120 million) compared with a net profit of 1.6 billion Swedish krona a year earlier. That is not ideal at a time Ericsson will have to dig deep to stay in the league of big pay TV players, making a sell off still quite likely, if anyone wants to buy the business, and feels it still has life in it.