Ericsson acquires Envivio for $125M, partners with AT&T on DirecTV tech transition

AMSTERDAM--Ericsson took the next step in the latest round of video industry consolidation, announcing it has acquired multiscreen encoding and compression provider Envivio for about $125 million in a cash tender transaction. The company also will take the lead in integrating DirecTV's satellite assets with AT&T's U-verse assets.

Ericsson executives made the announcement at the IBC Show here. The deal is expected to close in the fourth quarter of 2015.

Acquiring Envivio helps Ericsson further put into place the pieces to build a multiscreen empire. The company made its first big foray into IPTV when it bought Mediaroom from Microsoft in 2013; it added media services company Red Bee Media and TV Anywhere provider Azuki shortly afterward. Ericsson also added Fabrix Systems, a cloud storage platform provider, in October 2014. Rolling Envivio into the mix will give it more direct control over the compression component of IP video delivery and, potentially, increase its competitiveness in the video delivery segment.

"We want to extend our leadership in compression, combining together hardware and software in order to be able to address all possible use cases and give the most abilities to our customers using the best resources for the use cases that they [present]," said Elisabetta Romano, vice president and head of TV and media business support solutions at Ericsson.

For Envivio, joining Ericsson will give it greater scale along with a broad rights portfolio, Envivio CEO Julien Signes said, along with good penetration on the consumer side as well as good delivery fabric and storage capabilities. "So we integrate very well with this. We are more of a software solution. The historical compression is based on hardware, which a lot of is really good compression from Tandberg [acquired by Cisco in 2009]. We've had from day one a software cloud architecture to deliver multiscreen agnostically," Signes said.

Envivio customers include Tier 1 pay-TV providers like Comcast and Liberty Global.

This is the second purchase of a major compression vendor in as many weeks. Amazon Web Services announced it was acquiring Elemental Technologies for an undisclosed amount.

(Elemental has worked closely with Ericsson in the past on multiscreen delivery solutions, integrating its video processing software into Ericsson's Virtualized Encoding Solution, for example, so it's interesting that Ericsson went with Envivio instead.)

Ericsson also said it has been selected by AT&T to help it deliver its U-verse product across its newly acquired DirecTV footprint.

"We are talking about partner transformation, and that's what we are doing here with AT&T," Romano said, adding that Ericsson wants to help the service provider "bring the best out of the solution."

Ericsson did not provide too many technical details on how DirecTV will integrate with U-verse. Romano said that she met with AT&T's CTO last week and that Ericsson is going to integrate the platform in a way that combines the two halves of the business, DirecTV and AT&T U-verse. "And then immediately after, add new functionalities, and finally evolve it into a new solution."

How well the integration will go remains to be seen. AT&T uses Ericsson's Mediaroom product to deliver U-verse, while DirecTV's middleware component is Cisco Videoscape (built on its acquired NDS software). For now, Romano said, the satellite and IPTV providers will keep their respective products, and the work "to map the different applications into the architecture is going on now."

For more:
- see Ericsson's Envivio announcement
- and its AT&T-DirecTV release

IBC Coverage: FierceCable IBCLive

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