Zattoo eyes MobiTV fallout and European expansion

Even though the formal auction is now over for the assets of MobiTV, the bankrupt US supplier of video software and infrastructure services, another MobiTV wannabe is still waiting in the wings for the aftermath.

Zattoo, an ambitious 15-year-old IPTV software and services provider based in Zurich, Switzerland, is a sideline player that's eyeing the MobiTV fallout closely. Although its focus is mainly on Europe and it was not one of the seven qualified bidders in the just-completed MobiTV auction, Zattoo hopes to take advantage of MobiTV's situation to gain a bigger foothold in the huge US IP video market down the line.

Unlike the seven companies that bid for MobiTV's IPTV assets, Zattoo has not engaged in any formal talks with the National Cable Television Cooperative (NCTC), which has represented dozens of cable operators and telcos that rely on MobiTV for IP video services. But Zattoo executives have inquired about potentially filling in any gaps left by MobiTV's recent Chapter 11 filing and are pursuing other US leads, according to Zattoo CEO Niklas Brambring.

"We're looking for next steps in the US," Brambring said. "We're looking to see if we can jump into [the fray]." Currently, Zattoo supplies streaming support to one US-based service provider, Hotwired.

The long reach across the Atlantic comes as Zattoo primarily seeks to expand its footprint in Europe, where it now offers IPTV support services in Austria, Germany, Ireland and Switzerland. Originally created to stream the 2006 FIFA World Cup in Germany, the company offers both free and subscription-based live IPTV service to consumers and a TV-as-a-service (TVaaS) software platform to operators, broadcasters and OTT providers.

Zattoo, which competes against such other European IPTV players as Kaltura, Brightcove, Cillian, Magine and SSS, already claims to be the largest streaming provider in Europe with roughly 2 million registered users, primarily in Germany and Switzerland. But, not content with that pole position, it's now aiming to boost its European influence further by moving into such potentially promising markets as France, Poland and the Nordic nations.

In particular, Zattoo is looking to expand by building up the wholesale end of its business with its TVaaS platform. Rather than burnishing its legacy direct-to-consumer video operations, the company is focusing on B2B deals with service and content providers because it sees that business as more profitable and less risky than direct-to-consumer.

"We're still in that (B2C) business," Brambring said. "But we're moving more and more into B2B." Going forward, he added, "Our customer is clearly the operator, not the end user."

In fact, similar to MobiTV, Zattoo now prides itself as an end-to-end provider of IP video services to content and service providers. As such, it offers white-label apps, TV and subscription VoD features, a hosted technology platform and various tools and services for delivering IPTV and streaming video to its customers.

"We are great at dealing with big pains in the ass." Brambring said. "A lot of companies claim they're end-to-end. But they aren't really."

Unlike many of its IPTV brethren, Zattoo also focuses mainly on Tier 2 and Tier 3 network operators and media companies, with smaller players making up at least 20 of its 30-plus wholesale customers. 1&1 Ionus, a German ISP with about 4 million broadband subscribers, and eir, Ireland's largest telecom provider, rank among its biggest customers.

Viewing the entire European TV market as his company's potential turf, Brambring sees about 20% of the continent's 200 million TV households, or 40 million homes, migrating to IPTV now. Based on each of those homes generating €20 ($24.29) a year, that translates to a potential €800 million ($971.44 million) market. If the big providers account for up to half of that total, that still leaves at least a €400 million ($485.72 million) market for Zattoo's services, he figures.

"I think the market will grow," Brambring said. "Then it's just a matter of execution."

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— Alan Breznick, Cable/Video Practice Leader, Light Reading

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