Intel is said to be planning an online service to offer television channels across the United States, delivered over the internet in subscription bundle similar to cable and satellite pay-television packages. Intel is pitching the concept and its own set-top box or media gateway to media companies. Intel is not alone in such ambitions. Apple, Microsoft and Google all have their eye on the television in the living room as well as personal computer, mobile and tablet screens. So is Intel any more likely to succeed?
The Wall Street Journal reports that Intel is courting media companies in plans to create a virtual cable operator, with plans to launch by the end of 2012, according to unnamed sources.
“Now, all they need is… everything else,” Bernstein analysts wrote in an investor note. “Content, for example.”
It is not the first foray that Intel has made into the television entertainment market. Intel Viiv, pronounced live, was designed as an entertainment platform. It is no longer live. Intel was also partner with Yahoo! in an early connected television initiative, promoting application widgets. Its partnership with Google to launch a television platform flopped miserably. It subsequently abandoned ambitious plans to put Intel chips inside televisions and set-top boxes, shutting down its Digital Home Group, although it remains a supplier to some manufacturers.
Both media owners and cable carriers seem likely to resist such plans, preferring to preserve the status quo of bundling channels in tiered tariffs. In theory, a virtual operator could buy programming at similar prices and still undercut cable companies, but as broadband providers they would have little incentive to support such an initiative.
AT&T and Verizon have both entered the market, in competition with cable companies, with their own telco television services, based on Microsoft Mediaroom software. Neither has national coverage. They would arguably be better placed to offer a virtual cable service, as would satellite operators DIRECTV and Dish.
Primarily a wholesale component manufacturer, with core competencies in making processors and chipsets, Intel has little direct experience of the media industry. Intel is a supplier of processors for some set-top boxes, including one produced by Pace for Comcast, the largest cable company in the United States, which now owns NBC Universal. That does not necessarily qualify it to deliver services to consumers.
Intel hired Erik Huggers, the former director of Future Media and Technology at the BBC, who previously worked for Microsoft. He is now the corporate vice president and general manager of the Intel Media division.
Intel certainly needs to diversify from its dependence on personal computer sales. It has little presence in smartphones and tablets and has so far failed to persuade people they need Intel inside their televisions. With no particular operating system dominating the television market, manufacturers can pick and choose from cheaper chips.
Despite its size, Intel faces considerable challenges in entering the media market. The company has limited experience in the field and seems less culturally aligned than Apple, Google or Microsoft to succeed. Nevertheless the concept of a virtual cable television service operator appears technologically inevitable. Whether we will see it this year or next is less certain.