Microsoft will sell its Mediaroom business to Ericsson, after more than 15 years pursuing the market for Internet Protocol Television, or IPTV. Financial terms of the deal weren’t disclosed. It’s expected to close in the second half of the year.
Microsoft Mediaroom, headquartered at Microsoft’s Mountain View campus, employs 400 people worldwide and reaches 11 million households through television services from telecom companies including AT&T and Deutsche Telekom. A Microsoft spokesman says Ericsson is expected to make job offers to all Mediaroom employees.
“This acquisition is mutually beneficial and strategically aligned for both parties,” says Microsoft executive Yusuf Mehdi in a blog post. “Ericsson will continue to invest in the growth and success of Mediaroom to the benefit of customers, employees, and the industry. It allows Microsoft to commit 100 percent of its focus on consumer TV strategy with Xbox.”
He adds, “With the sale of Mediaroom, Microsoft is dedicating all TV resources to Xbox in a continued mission to make it the premium entertainment service that delivers all the games and entertainment consumers want – whether on a console, phone, PC or tablet.”
Bloomberg reported about the talks between the companies in late March, saying at the time that the price could top $1 billion. Ericsson says it expects the global market for IPTV to reach $32 billion in 2013, growing to $45 billion in two years.
IPTV made headway by giving telecom companies a way to deliver television over traditional phone lines. Microsoft’s IPTV initiative was an example of the company being well ahead of the market — perhaps too far ahead. Microsoft Chairman Bill Gates told reporters in 2007, “We started over 10 years ago, so we were completely overoptimistic.”