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EchoStar Backs Out of Cable Set-Top Biz

EchoStar Corp. LLC (Nasdaq: SATS) is getting out of the U.S. cable set-top business and shutting down Aria, a video navigation and IP-based video delivery system tailored for Tier 2/3 cable operators, an industry source says.

EchoStar told Multichannel News on Monday that the shut-down was prompted by "insufficient revenue return opportunities." In other words, EchoStar, which has had to fight the stigma of being linked to one of cable's fiercest rivals -- Charlie Ergen and Dish Network LLC (Nasdaq: DISH) -- simply could not find enough buyers. EchoStar, which reports first-quarter earnings on May 7, began its quest to sell to cable soon after the set-top box and technology unit was spun off from Dish in 2008. (See EchoStar Ready to Split.)

Update: EchoStar issued a statement on Tuesday confirming that it is exiting the U.S. cable market and ceasing development of its Aria platform "effective immediately," but will continue to supply video gear and software to cable, satellite and telecom customers outside the U.S. EchoStar will now shift its U.S. cable focus on the company's "unique intellectual property and advanced content delivery technologies," a reference to EchoStar's Sling video place-shifting platform and the adaptive bit rate technology it obtained from Move Networks. (See EchoStar Buys Move Networks.)

EchoStar officials previously were confident that the ability to integrate place-shifting Slingbox technology would be interesting to small and mid-sized MSOs that were looking to break away from traditional suppliers such as Motorola Mobility LLC and Cisco Systems Inc. (Nasdaq: CSCO). The company's stated goal for Aria was to have set-tops deployed to 1 million U.S. cable subs by the end of 2013. (See EchoStar's Cable Target: 1 Million Subs .)

EchoStar never announced any U.S. cable wins, though CableOne , an MSO with about 720,000 customers, did conduct tests of the company's products. Light Reading Cable reported in February that CableOne had severed its relationship with EchoStar after the vendor failed to meet deadlines. At the time, EchoStar said multiple operators were testing its Aria platform. (See CableOne Unplugs EchoStar .)

EchoStar did win a deal to supply HD-DVRs to Germany's Unitymedia GmbH , which is now part of Liberty Global Inc. (Nasdaq: LBTY). In March, EchoStar's Europe division launched the HDC-420, an HD box outfitted with the Conax AS security system that can become a DVR when connected to a hard drive via the box's USB port. (See CableOne Unplugs EchoStar and EchoStar Gains Foothold at Unitymedia.)

This also isn't the only time EchoStar has burned the Tier 2/3 market with big ideas that turn out to be failed businesses. The company shut down its MPEG-4-based ViP-TV satellite distribution service last fall, requiring about 25 small and rural telcos and cable operators to quickly migrate to video origination systems from Avail-TVN or the Comcast Media Center (CMC) . (See EchoStar to Shut Down ViP-TV .)

Echostar also isn't the only company to pull out of the U.S. cable set-top market in recent months. Panasonic Corp. (NYSE: PC) began the process of shutting down its domestic cable division in January despite making some headway with Cablevision Systems Corp. (NYSE: CVC) and Time Warner Cable Inc. (NYSE: TWC). (See Panasonic Exits US Cable Set-Top Biz .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

Jeff Baumgartner 12/5/2012 | 5:35:25 PM
re: EchoStar Backs Out of Cable Set-Top Biz

EchoStar provided this comment this morning:

 

“EchoStar recognizes that the highly demanding and competitive nature of the US cable set-top box market is very cost competitive. After considerable review of the market and EchoStar’s sales/product development efforts, EchoStar has concluded the US cable market offers insufficient revenue return opportunities to the company and our investors.  Rather than compete with existing set-top manufacturers, we are shifting our resources to support their product innovations with EchoStar’s unique intellectual property and advanced content delivery technologies.  Therefore, EchoStar is ceasing development of the Aria platform effective immediately.

 

EchoStar remains firmly committed to supplying advanced hardware, software, and system solutions to its global cable, satellite, and telecom customers outside of the US cable set top box market.  “

 

 


 

Jeff Baumgartner 12/5/2012 | 5:35:24 PM
re: EchoStar Backs Out of Cable Set-Top Biz

EchoStar tried to convince everyone else that the U.S. cable guys would see past all that. Sounds like they finally got tired of trying to convince themselves that that was remotely possible. But they did put forth a pretty big effort here in both money and manpower to try to make this happen. It's not  like they stepped in and stepped out.  JB


 


 





 




craigleddy 12/5/2012 | 5:35:24 PM
re: EchoStar Backs Out of Cable Set-Top Biz

Echostar's withdrawal has much to do with the state of the set-top market and the company's evolving strategies in video and wireless, but it faced an uphill fight from the beginning due to Dish Network's aggressive campaigns against cable, including earlier TV commercials that likened cable operators to pigs.


Even though Echostar is now a separate technology company from Dish, some cable operators couldn't look passed their feelings toward Charlie Ergen, which made its STB business a non-starter. 


 

craigleddy 12/5/2012 | 5:35:23 PM
re: EchoStar Backs Out of Cable Set-Top Biz

Yea, pigs or no pigs, the Aria product line seemed like it would be a logical fit for a lot of the operators they were targeting. Perhaps set-tops are becoming a lousy business, as even some of the big guys are indicating, especially as everyone moves toward more IP delivery.   

Jeff Baumgartner 12/5/2012 | 5:35:20 PM
re: EchoStar Backs Out of Cable Set-Top Biz

A good idea  where EchoStar will go next with respect to its  domestic cable strategy popped up at the CES show, when Broadcom announced it had integrated Sling's software into the BCM7425, an HD gateway SoC.  Probably makes more sense for EchoStar... this way they can still try to sell their Sling capabilities to US MSOs without having to sell them set-tops or a whole video ecosystme that they'll likely never buy. Anyway, Broadcom's initial Slingloaded SoC is expected out in Q3. JB





 




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