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Earlier this year, Microsoft revealed that its Microsoft Mediaroom IPTV and multimedia platform is delivering video entertainment to more than 1 million set-top boxes around the globe. The company, through its Microsoft TV division, has been working hard to become a major player in the IPTV space.
Microsoft TV is a family of software solutions that supports a range of capabilities, including interactive program guide, digital video recording, high-definition TV, on-demand programming and IPTV services. The software is designed to work across a full range of TV devices such as set-top boxes, and Microsoft is helping telecommunications companies such as BT, Verizon, Deutsche Telekom and SingTel as they look to compete more effectively against satellite and cable competition.

IPTV success stories are starting to pop up around the globe. Both Verizon in the United States and France Telecom (Orange) have around 1 million TV subscribers, respectively, and more growth is expected, Michael Philpott, a telecoms analyst at Ovum tells Via Satellite that, “By 2011, Ovum estimates there will be 55 million IPTV subscribers, however, with a total TV market of over 1.2 billion households, it still represents a small portion of the TV industry.”

As corporate vice president of the Microsoft TV division, Enrique Rodriguez leads the teams responsible for the development, marketing, sale and deployment of Microsoft’s software and service solutions for the digital television industry and also is responsible for charting the division’s growth and integration with Microsoft’s global consumer initiatives.

“2008 is shaping up to be a pivotal year for Microsoft in television,” says Rodriguez. “TV is taking a giant leap in distancing itself from traditional broadcast to a new category of entertainment we call connected TV. Microsoft’s vision is to allow consumers to experience entertainment content on any device, any time, anywhere. Internet Protocol TV, or IPTV as we call it, is a key component in our strategy, which is focused on enabling unique and compelling connected entertainment experiences.”

Rodriguez discusses the role of IPTV platforms and their impact on the pay-TV market, Microsoft’s expectations for and role in the market, and  whether there is an opportunity for deals with satellite players with Via Satellite Associate Editor Mark Holmes.

Via Satellite: How would you assess the performance of Microsoft TV over the last two years?

Rodriguez: In the last two years, several of our service provider customers, which include more than 20 of the leading service providers around the world, have transitioned from trialling Microsoft Mediaroom to commercially deploying the platform. Over a dozen major operators have deployed the Microsoft Mediaroom commercially, and it is now running on 1 million set-top boxes worldwide. In January, we also announced our customers were adding two new subscribers homes per minute to a Mediaroom-enabled. Less than two months later, that number has increased to three per minute. This shows you just how fast things are progressing.

Via Satellite: Verizon and France Telecom have been particularly successful with their IPTV offerings. Have you been surprised there have perhaps not been as many other successful stories in terms of IPTV so far?

Rodriguez: Given IPTV is still a relatively nascent technology, we think it really validates our approach, and we are glad to see its rapid progress and uptake around the globe. We are seeing IPTV success stories internationally today, through leading service such as AT&T, BT and Deutsche Telekom. While our service provider customers launched services after many others in the market, they are enjoying strong market success and traction.
We believe the subscriber growth momentum we’re seeing in the marketplace will incrementally accelerate over time, particularly when service providers begin to widen the gap with incumbent TV providers through IPTV-enabled features and services.

Via Satellite: Are you looking to sell Mediaroom or a scaled-down version to small service providers? Are you expecting to sign a number of deals with smaller service providers in 2008?

Rodriguez: We are working with service providers of all different sizes, including providers such as Magyar Telecom (T-Online Hungary), Slovak Telecom and T-Com Montenegro (Crnogorski Telecom). Some of our most innovative solutions are with these service providers. For example, T-Com Montenegro is already offering a selection of interactive services to subscribers including a phonebook, weather forecasts and betting and is one of the first service providers to offer these types of applications.

Via Satellite: France Telecom may look to also offer services via direct-to-home services in order to extend its coverage, and in the United States, speculation that AT&T may acquire EchoStar refuses to go away. Do you think we will see telecommunications companies look to satellite to offer services? Is this the logical next step?

Rodriguez: We cannot comment on behalf of telcos, so you would have to go directly to them for their input.
We believe the Mediaroom-enabled TV experience is the very best premium digital-TV service on the market today, and it is improving with time. Microsoft Mediaroom is an end-to-end software platform that enables service providers to deliver next-generation TV experiences to consumers, including standard- and high-definition live TV channels, advanced and [digital video recorders] and new connected entertainment experiences, such as the new Xbox 360 with Microsoft Mediaroom, to consumers.

IPTV is a competitive pay-TV service in which content is delivered securely over a private, managed network. Like the Internet, an IPTV network is a two-way, broadband network based on IP but, unlike the Internet, an IPTV network is owned and operated by the service provider to guarantee quality of service. IPTV offers the features consumers have come to expect from a TV service — a rich programming guide, hundreds of digital TV channels, thousands of [video-on-demand] titles, digital video recording, etc. IPTV also enables a number of “better TV” features that are unmatched by today’s cable and satellite services including: instant channel zapping, tunerless picture-in-picture streams, multi-picture-in-picture applications, virtually unlimited numbers of channels and , rich interactivity, connected entertainment services across devices in the home and more.
We don’t expect our customers to migrate to offering satellite services over our IPTV service. We will continue to work closely with our customers to ensure they are deploying the very best in TV to their customers.

Via Satellite: If telecommunications companies and direct-to-home operators look to provide services via a combined satellite-IPTV system, how would Microsoft work with satellite providers’ existing conditional access systems and software?

Rodriguez: We are ready to engage with satellite operators interested in Microsoft Mediaroom at any time. Microsoft Mediaroom provides a viable solution to satellite operators looking to offer more advanced connected TV features, and we are flexible in working with our customers’ various backend infrastructures.

Via Satellite: A media analyst has forecast that Mediaroom will generate less than $1 billion in cumulative revenue between 2006 and 2012. Is this in line with your own forecasts?

Rodriguez: We don’t disclose specific Mediaroom revenue forecasts, however, we have committed to this business because we see it as a viable revenue stream, and the company is investing its resources to bring connected TV to consumers around the world.

Via Satellite: Does Microsoft TV , represent a good business for Microsoft?

Rodriguez: The business is already successful for us. We are working with more than 20 of the world’s leading service providers and the platform is running on 1 million set-top boxes worldwide. We are happy with the progress we’ve make in going from initial concept to large-scale commercial deployments of Microsoft Mediaroom in just a few short years.

Looking at the overall IPTV industry opportunity, Gartner predicts IPTV revenues will grow to $13.4 billion by the end of 2010. IPTV technology stands to create new revenue opportunities for all involved including service providers, hardware manufacturers and content providers. Advertisers will also benefit from IPTV as it allows them to launch interactive, personalized campaigns similar to what consumers are used to experiencing via the Internet. It also gives advertisers and content providers the opportunity for multiple touch points to the same consumer.

Via Satellite: With the changing dynamics of pay-TV and how users access content, what role do you see Microsoft having on the overall TV landscape?

Rodriguez: We are now focused on creating powerful software that — combined with broadband connectivity — enables a new class of compelling connected and personalized video-based experiences to consumers. We are also about helping people enjoy the television programs, movies, sports and videos that matter most to them. Our vision starts with the TV set but it goes far beyond to include the [personal computer] and any other device where TV and video entertainment matters to consumers.

Up until now, the TV has been an isolated device, falling behind in terms of connectivity, personalization and social features. CTV is focused on enabling the best in TV and video entertainment that easily connects your favorite programs and movies to your lifestyle and schedule. When you combine the Microsoft Mediaroom platform with Microsoft’s other video competencies, such as Windows Media Center, which turns your home [personal computer] into a connected entertainment hub, you begin to see how this vision is becoming reality in very real and tangible ways. It’s a very exciting time indeed.

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