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Originally published April 8, 2013 at 9:23 PM | Page modified April 9, 2013 at 1:24 PM

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Microsoft to sell Internet TV unit Mediaroom to Ericsson

Microsoft has struck a deal to sell its Mediaroom business unit as it focuses its Internet television efforts on the Xbox game console.

San Jose Mercury News

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For more than a decade, Microsoft has tried various ways to marry the Internet to the television. Now it has decided to focus its Internet television efforts on its Xbox game console.

On Monday, the tech giant announced it is selling its Media­room business unit to Ericsson. Based in Mountain View, Calif., Mediaroom makes set-top box software for AT&T and other pay-TV companies that deliver television video using Internet transmission.

“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,” said Yusuf Mehdi, a corporate vice president in Microsoft’s interactive-entertainment division.

The companies did not disclose how much Ericsson is paying for Mediaroom, but CNet News, citing an anonymous source “familiar with the deal’s terms,” reported the amount to be “just south of $200 million.”

A Microsoft representative declined to comment beyond a blog post and a news release. Ericsson representatives did not respond to requests for comment.

The companies expect the deal, which is subject to regulatory approval, to close in the second half of the year.

Mediaroom employs more than 400 people worldwide. Its software is largely used by telecom companies around the world who want to offer pay-television service, and has been deployed by 40 companies worldwide on some 22 million set-top boxes in more than 11 million households.

The software allows set-top boxes to record television programs and to tune in live and on-demand channels streamed using Internet protocol. With the service, operators are able to send just one or a handful of video streams to each customer, rather than broadcasting all available channels to all customers, which is how cable-TV systems operate.

In recent years, Microsoft has augmented the video capabilities of the Xbox.

Users can watch videos streamed from Netflix and Hulu, rent or buy videos from Microsoft’s own Xbox Video service or even tune in live or on-demand TV from pay-TV operators.

The deal will boost Ericsson’s market share to about 25 percent of the Internet protocol TV market, the companies said.

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