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Cable Technology Feature Article

October 31, 2013

Intel's TV Plans Now in Question

By Tara Seals, TMCnet Contributor

After much hype and who knows how much investment, it looks like Intel (News - Alert) is ready to pull the plug on its set-top box-based dreams for launching its own TV service. According to sources, the chipmaker is looking to turn over the reins of Intel Media, the unit responsible for TV development, to partner Verizon (News - Alert) Communications.

Earlier in the year reports surfaced that Intel was looking to create its own TV service, to be delivered via an “Intel Inside” STB. The box would join a crowded field that includes Roku, Apple (News - Alert) TV and Boxee, not to mention pure-play over-the-top (OTT) streaming plays like Netflix, Amazon Prime, Hulu, Crackle and VUDU. But Intel thought it saw an important differentiator in pioneering a new content strategy that would allow users to bundle TV channels a la carte, paying only for what they want to watch. And, it planned on securing the distribution rights to standard cable nets in order to closely replicate the content stables of mainstream pay-TV providers like Comcast (News - Alert), DISH Network and AT&T U-verse. In addition to live TV, there would be on-demand options and a cloud-based DVR, and subscribers will have multiscreen access across TV sets, computers and mobile devices.

Accordingly, Intel forged ahead, trademarking the OnCue name, a logo and a tagline: "TV has come to its senses.”

But doubts emerged in June about the viability of Intel’s plans when Intel Corp.'s new CEO downplayed the silicon giant’s TV aspirations, noting that there is much work to be done on the content front.

"We believe we have a great user interface and the compression-decompression technology is fantastic," Brian Krzanich told reporters. "But in the end, if we want to provide that service it comes down to content. We are not big content players."

He added, “We're being cautious. We're experts in silicon, we're experts in mobility, in driving Moore's law. But we are not experts in the content industry and we're being careful."

Since then, Intel has reportedly been in talks with a range of content providers including Time Warner, NBCUniversal and Viacom to license TV shows and movies. And while those Big Media stalwarts have signed off on the concept of what Intel is trying to do, hammering out the exact business model is easier said than done. Not counting a few (failed) standalone mobile TV offerings, giving full, live feeds of cable channels to digital distributors has never been done outside of existing cable/IPTV and satellite TV Everywhere models. And in order to justify rocking the boat with that established, cash-cow distribution chain, media companies would charge a hefty premium to decouple channels from the established hegemony—a premium that would render Intel incapable of pricing the service competitively.

Last month the company said that it was looking for strategic partners for Intel Media, signaling ongoing issues. And now, now, sources told AllThingsD that the chipmaker is in advanced negotiations to have Verizon take over the project entirely. It’s unclear if Intel will retain a role in the project or not.

For its part, Verizon brings the content relationships and the ability to leverage synergies from the IPTV and broadband FiOS service to the table. And, it has already partnered with Redbox to roll out Redbox Instant, a Netflix-like Web-plus-DVD movie-rental service. Intel Media could fit into its business in any number of ways, from developing a home gateway option for subscribers to becoming a conduit for rolling out TiVo (News - Alert)-like value-added TV services.

The news comes as others struggle in the OTT STB space. Amazon’s plans for a holiday release of its own-branded streaming standalone box have been shelved until after the holidays, according to reports. Amazon’s idea is to offer built-in access to an à la carte video on demand (VOD) store, which features newer films and TV shows, while showcasing Prime Instant, which offers a range of streaming TV and movies as part of an annual $79 membership.

Edited by Alisen Downey

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