Policy

EchoStar Abandons Effort to Crack U.S. Box Market

4/30/2012 12:01 AM Eastern

Charlie Ergen’s EchoStar Technologies
has given up trying to fight its way into the U.S. cable
market.

EchoStar, citing a lack of sales potential, is shutting
down its domestic cable set-top box business and has
ceased development of its Aria platform, the company
confirmed last week.

With the change, it will shift resources to support
“EchoStar’s unique intellectual property and advanced
content-delivery
technologies,” the
company said in a
statement provided
to Multichannel
News
. However,
EchoStar said it “remains
firmly committed
to supplying
advanced hardware,
software and system
solutions to its global
cable, satellite and telecom customers outside of the U.S.
cable set-top-box market.”

EchoStar owns Sling Media, developer of the Slingbox
device, and acquired the adaptive bit-rate technology of
Move Technologies last year for $45 million. It will still
have a cable play with Sling: EchoStar is working with
Broadcom to integrate the place-shifting software into
set-top and gateway chips — for devices aimed at cable
operators and other providers — which are expected to
be available by the third quarter of 2012.

EchoStar debuted its Aria suite of products last summer,
with a lineup that included hybrid Internet set-top
boxes designed to let independent cable operators deliver
over-the-top video-on-demand and HD user interfaces.

But besides facing entrenched
competition
from the likes of Cisco
Systems and Motorola
Mobility, EchoStar was
likely hindered by its affiliation with Ergen — a
longstanding nemesis of
cable operators.

EchoStar split from
Dish Network in 2008,
but Ergen remains chairman
of both companies. The No. 2 U.S. satellite-TV operator
still accounts for the bulk of EchoStar’s revenue: Dish represented
79.4% of its sales, or about $2.2 billion, in 2011.

The now-discontinued EchoStar set-tops included
“SlingLoaded” units, which provided access to TV and
DVR recordings over the Internet. Along with the devices,
EchoStar was offering IP-based content delivered via
the Internet to servers at an MSO’s headend, to let smaller
cable operators deliver VOD and an HD guide without
a large capital outlay for infrastructure.

“EchoStar recognizes that the highly demanding and
competitive nature of the U.S. set-top market is very costcompetitive,”
the company said. “After considerable
review of the market and EchoStar’s sales/product development
efforts, EchoStar has concluded the U.S. cable
market offers insufficient revenue return opportunities to
the company and our investors.”

EchoStar had previously said at least one major midtier
operator was testing out Aria. The Washington Post
Co.’s Cable One had been kicking the tires on the Aria
concept, but ended those trials after the vendor missed
several delivery deadlines, Light Reading Cable reported
in February.

EchoStar said there would be no layoffs as a result of
phasing out the Aria product line. “EchoStar Technologies
earned $2.7 billion in revenues last year and has
4,200 staff around the globe, working in engineering,
satellite services, digital transport, etc. There is plenty of
work to go around,” the company said.

September