M+E Daily

By Paul Sweeting

Microsoft has acquired home automation and digital media startup id8 Group R2 Studios for an undisclosed sum, according to the Wall Street Journal, beating out Apple and Google, both of which reportedly had also with the company.

Better known as R2 Studios, the company was founded in 2011 by Blake Krikorian, the entrepreneur who brought the Slingbox to market and later sold that company to EchoStar Communications for $382 million.  R2 released an Android app in 2011 that let users control their home security system and thermostat from a smartphone but since then it has been operating largely in stealth mode while developing technology for displaying and distributing digital media on TV screens. The company owns a small portfolio of potentially valuable patents related to controlling devices and interfaces, which were thought to be the main focus of the interest in the company from larger media technology firms. Those patents were included in the Microsoft acquisition, according to the Journal.

While R2 has not released any commercial products based on its digital media display patents, the technology would appear to be a natural fit with Microsoft’s evolving strategy for turning the Xbox game console into a general digital home and media hub. Late last year Microsoft launched SmartGlass, app-embedded technology that allows any mobile device, regardless of operating system, to communicate and sync with the Xbox 360. So far, Microsoft has positioned SmartGlass largely as a second-screen technology that can pull content from the Xbox and display it on a mobile screen. By making it easier to display digital media on TV screens, the R2 Studios technology might enable Xbox owners to use a mobile device as a primary screen for acquiring content that is then displayed on the TV, much as Apple TV owners can now do from their iPhones and iPads using Apple’s AirPlay technology.

If Microsoft is able to integrate R2 technology with SmartGlass, however, it might be able to expand the scope of search capability to any mobile device regardless of operating system.

Another capability enabled by R2 technology could also emerge with the next generation of Xbox console, which could be unveiled as soon as E3 in May.  According to Wedbush Securities analyst Michael Pachter, the next-gen Xbox will likely include a TV tuner and will be able to communicate with any screen in the home. “If you have 10 TV sets, you’ll be able to pull 10 signals and send them to any TV,” Pachter said at the Digital Hollywood conference in October. R2 Studios’ technology for displaying and distributing content on TV screens would seem like a natural fit with that goal, whether as an enabling technology or as protection against potential claims against Microsoft based on the R2 patents.

Either way, R2 Studios’ technology is likely to be worth more integrated with Microsoft’s Xbox platform than standing alone.