Feeding on the rotting corpse of a 7 year old failed IPTV strategy
Published: Thursday 22 March, 2012
There were two ideas occupying the minds of all the attendees of this week’s IP&TV World Forum, one very public, and the other they all thought was their own personal secret. The first is what to tell their boards about the move by Cisco to enter the market space, by paying $5 billion to take over the $1 billion revenue NDS, the Israeli/UK based conditional access company which has a special relationship with News Corp.
But it was the second thought that is perhaps the more significant, as the IPTV community once again ponders a future without an omnipresent leading force, as Microsoft Mediaroom virtually self-destructs. To most people this is a fact, but not an announced fact, and each player believes that he or she is the only person who is aware of it, but everything that was announced at the show, even the Cisco NDS deal, were focused on this truth.
Mediaroom came on the scene in blaze of glory and contract signings in 2004/5, and yet it did not deliver a single line of code to anyone which worked, much before 2007. The system was a promise, and with it, Microsoft soaked up all of the available tier 1 equipment revenue, denying many IPTV players much needed design wins. The market has, as a result of this, consolidated, with Motorola picking off at least 7 companies in the sector, including recently middleware player Dreampark, VoD server maker BitBand, DRM supplier SecureMedia, along with older deals for two encoder makers in Tut Systems and Modulus, another VoD server supplier in Broadbus, IPTV set top maker Kreatel. In fact Motorola has bought far more companies than this in the sector, but we’re not entirely sure that the product lines still exist.
Other IPTV players have been biding their time, changing direction slightly, and some have been acquired by a major operator parent, or are living off scant tier 2 deals. Survivors at the show included many who were in the new wave of IPTV conditional access back in 2004, such as Verimatrix, as well as middleware specialists like Orca, touting this week its final acceptance by its parent’s parent (it is now owned by Viaccess, which is turn is owned by France Telecom) of the middleware that it has been pushing since 2004.
We remember meeting then CEO, Haggai Barel at the 2005 IBC, and he had a very sour face, and he confided that Microsoft had ruined the market. We saw Barel wandering around the show this week too, but he, like many were enervated, as were numerous players, by the OTT slant that their products have now all adapted to. New player Comigo came out with an entire new OTT UI paradigm, and while the NDS stand had very few potential customers surrounding it, it had plenty of well-wishers and hangers on - curious visitors who merely wanted to know what Cisco had planned for it.
The answer is simple and it is down to the single elephant in the room, the idea that Mediaroom is failing and the fact that someone needs to take up its crown – Cisco clearly believes that it is ready to do this. But more to the point, it is frightened that one of its rivals will do it if it does not act – Ericsson, Alcatel or worse still Huawei.
So was there a big “closing down” sign at the Microsoft stand? Of course not. But when one person lists the departure of major executives, such as Jim Baldwin, Wallace Colyer and sales leader John Walthall, to name but a few, gone either to the new mysterious Media division of Intel, that has yet to declare its strategy, or the new IPTV major, Ericsson, a company we have lampooned in the past for leading an IPTV standard without any IPTV integrations to its credit, then it all starts to add up.
One major story was the announcement by Ericsson and Verimatrix of the replacement of the Chunghwa system, replacing the original system, cobbled together early in the history of the IPTV movement, with contributions from Israel’s Optibase, Orca, Widevine, and Alcatel, with Acer set tops, all now entirely replaced and replenished with Ericsson network equipment, middleware, VoD servers and encoders and a brand new Verimatrix conditional access system.
It’s not the first Ericsson deal, but it is the first that sits in the same class as those deals that Mediaroom rolled out in the mid-noughties. It is unlikely to be the last and Cisco is concerned that with growing wireline influence in the Far East, Ericsson may begin to eat away at its own core revenues. Ericsson has almost as many acquisitions in its belt as Cisco, and taking the Nortel Switch assets, for example, is one that reaches into the core network areas usually associated with Cisco.
Mediaroom is now beset by an outpouring of senior staff, and we can add to the roster EVP, Andreas Mueller-Shubert, who had already left, and now the entire division reports to the Xbox division, instead of reporting alongside it. One Chief Marketing Officer at the show, in the form of Yann Corqueux, now resident at Netgem, put it very simply, “There is no more BtoB at Microsoft, it has decided that its entertainment strategy will now be BtoC.”
What he means by this is that Microsoft wants to reach out to consumers with an Xbox video service offering and grow its base of 10 million or so Live network subscribers directly, not through operators.