The Mediaroom opportunity is still significant, totalling around 1.5m subscribers and almost 4m current set-top boxes in operation, mostly in the US market with AT&T and Verizon. This is expected to grow to almost 12m receivers by 2012, giving Mediaroom operators a very large scope of potential customers to advertise to.

The opportunity for advertising insertion technology is significant for both operators and broadcasters. For operators, it allows for increased advertising revenue directly to the operator for on-demand or application layer adverts. Since many IPTV operations are run at low ARPUs as part of a broader subscriber strategy for fixed line and broadband, this is a key opportunity to make additional revenue.

In addition, advertising space within linear channels can be tailored for local audiences, a practice much more prevalent in Canada and the US than in Europe. By applying an insertion product to the US market, Microsoft can potentially open up the local telco markets, traditionally dominated by platforms such as Minerva's iTVmanager and Nokia Siemens' Myrio.

Harmonic are likely to be joined by other Mediaroom vendors offering advertising insertion products. In particular, Motorola's recent acquisition of Terayon and the Cherry Picker product has been demonstrated strongly in the IPTV space. With access to the entire supply chain for Microsoft IPTV deployments, Motorola would seem a likely choice to be next on the market.