The grip enjoyed for so long by Motorola on the US cable TV set top market is only as good as its DRM lock in ‘ more and more fraught under the established onslaught of the FCC CableCard initiative and the repeated incursions by overseas set top makers such as Pace from the UK, this quarter established as the global leader in Pay TV set tops.
While Motorola has enjoyed some considerable success in IPTV, not the least of that being set top deliveries to AT&T for its U-Verse project, it is the overseas penetration of Motorola set tops which promise it scale, continued volume purchasing and new CEO in waiting, Sanjay Jha a chance to re-invent the set top, around both Android and connectivity with its mobile handsets.
So there must be champagne corks popping over at Motorola HQ for what we think is its first major set top win in Japan, at KDDI, better known for its mobile network, as it moves to supply fiber to the home customers with IPTV.
Motorola has delivered a version of its VIP2060 HD DVR to KDDI which is launched in Japan on 2 June on KDDI’s “au Hikari” service, which offers 1 Gbps ultra high-speed optical fiber broadband connections.
The Motorola VIP2060 has a built-in 500 GB hard drive and comes with a quad tuner as standard. The set top has been hybridized to also accept terrestrial and satellite services, so it connects to an external antenna as well for receiving ISDB-T and ISDB-S (satellite).
The VIP2060 offers multiple recordings at once and can accept either MPEG-2 or MPEG-4 AVC video.
“It’s our mission to provide our customers with an advanced, media-rich entertainment lifestyle.” said Masahiro Inoue, Associate Senior Vice President, General Manager, Mobile Technology Sector, KDDI. “By working with Motorola, a global leader in developing and delivering innovative video solutions, we are able to provide significant value to our customers, including great IPTV HD and on-demand experiences as well as advanced time-shifting and mobility services. The launch of “HD-STB” marks a key milestone in further advancing our Fixed Mobile Broadcasting Convergence (FMBC) service, enabled by au Box.”
The big IPTV supplier in Japan is NTT and perversely in Japan the economics are the other way around from the US ‘ here the Telcos with FTTH are killing off cable. Recently Liberty Global jumped out of the cable market in Japan, selling J-Com to KDDI, for $4 billion, as the company embarks on a turn-around, shifting slowly from cable to FTTH technologies.
The motivation back in January for that deal was that KDDI could now establish a serious quadruple play, with mobile cutting across most territories as it buys up smaller cable operations and lays its own fiber in between. KDDI bought control of Japan’s No.2 cable firm Japan Cablenet back in 2006 and has bought up fiber-optic operations from power companies and before the J-Com deal had around 5 million homes on its broadband network. JCom has added another 3.3 million to these existing homes, taking it to 8.3 million of the 49 million homes in Japan, close to a 20% market share.
And perhaps the reason it has gone to Motorola is purely for both scale, which the US company can definitely provide, and also for all flavors of set top box ‘ with cable, fiber, terrestrial and satellite and all the hybrids between. Otherwise surely the business would have gone to a local Japanese provider or a Korean, Taiwanese or Chinese low cost provider.
KDDI though has the marketing capability of being the number two mobile phone company in Japan and it is an ideal customer for Motorola to experiment with handset/set top integration.
The moves by KDDI, such as buying J-Com have not proved popular with investors, who hated the fact that it has paid a premium for so many of its broadband acquisitions.
Initial revenues will likely come from top end customers, but then again in Japan, that’s almost everyone, because consumers push the limits of multimedia technology on a daily basis, and are considered about 5 to 6 years ahead of the US in terms of media service sophistication and bandwidth use. But if Motorola can keep KDDI customers happy, it could prove to be a life saver as US cable pickings become harder to find.