Light Reading

Intel Kissing OTT Goodbye?

Mari Silbey
11/27/2013
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OnCue, the proposed over-the-top (OTT) video service that Intel Media once planned to launch by year's end, is now on the auction block.

According to Bloomberg, Intel Corp. (Nasdaq: INTC) is reportedly seeking $500 million to rid itself of the servers, set-tops, and software that would have been the foundation for a new pay-TV service. But, even though several suitors have expressed interest, industry analysts doubt Intel will get even close to that sum for its aborted venture.

While Intel was still championing the Internet TV experiment as recently as this past summer, rumors started circulating in September that the chip company might be ready to abandon the business. Verizon Communications Inc. (NYSE: VZ) has emerged as the prime suitor for OnCue. But Bloomberg reports that Samsung Corp. and Liberty Global Inc. (Nasdaq: LBTY) have also met with Intel executives, although how serious they are about any potential acquisition is difficult to tell.

Initially, Intel promised to launch its budding OTT video service before the end of 2013, riding on the big pipes of cable operators, telcos, and other broadband providers. However, without any content licensing deals on the books, the company quickly lost its footing in the race to challenge incumbent cable, satellite, and telecom providers.

Intel is not the first pretender to walk away from the business either. Microsoft Corp. (Nasdaq: MSFT) memorably abandoned its plans to mount an alternative pay-TV service in 2012, also due to high licensing costs and the difficulty of securing necessary content agreements. But Google (Nasdaq: GOOG) and Apple Inc. (Nasdaq: AAPL) are among the companies still toying with the idea of launching their own subscription services. (See Microsoft Puts Pay-TV Plan on Pause and Google, Apple Pitch Pay-TV Services.)

Bloomberg says that Intel hopes to have the sale of OnCue completed by the end of the year. But industry analysts and other experts don't expect Intel to get anywhere near the $500 million it's reportedly seeking. On TiVo Inc. (Nasdaq: TIVO)'s earnings call late Tuesday, for instance, TiVo President & CEO Tom Rogers pooh-poohed the notion that OnCue could be worth that much.

— Mari Silbey, special to Light Reading Cable

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albreznick
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albreznick,
User Rank: Blogger
11/27/2013 | 10:57:23 PM
Re: Licensing
I think you have good reason to count on it. What I can't say, though, is whether a la carte will be all that much cheaper than today's unsightly bundles. The MSOs will lose their economies of scale for many channels. We shall see.  
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
11/27/2013 | 7:13:24 PM
Re: Licensing
I am counting on it Al...at that point my cord will be cut as well.  I don't watch anything but sports real-time anyway.  I only use about 10 channels anyway so who cares about the rest.  Or maybe by then they will realize that to support their infrastructure that they want to retain and grow customers by actually competing rather than acting like the monopoly that they believe they are (add word so sentence is grammatically correct).
albreznick
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albreznick,
User Rank: Blogger
11/27/2013 | 6:58:38 PM
Re: Licensing
Don't you worry, Liz and Carol. Chsange is gonna come, and pretty soon. As more and more younger consumers don't sign up for traditional pay TV subscriptions, the service and content providers will finally get the message and start changing their economic models. It is just about inevitable, even if they won't see or admit it just yet. The current model shall crumble.
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
11/27/2013 | 4:13:32 PM
Re: Licensing
Exatly Carol, why should non-sports fans pay for sports fans and vice-vera.  A la carte service is really the solution to the problem but it seems that cable, satellite and any other TV providers a loathe to give that choice to customers.  It seems as if they would rather people go to services like Netflix or Hulu instead.  A potential revenue losing proposition if you ask me.  The younger generation is more tied to the internet than TV so it would seem that the writing is on the wall, the only question is how long.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
11/27/2013 | 2:25:47 PM
Re: Licensing
Sports fans are probably not the best example because live sports drives up the cost of everything for everyone, even those who, for reasons I can't fathom, don't pay any attention to sports. 

But your point is well-taken. Even sports fans wind up paying more because they can't get just the channels they want, they have to get what the content provider wants to sell. 
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
11/27/2013 | 2:23:47 PM
Re: Licensing
You are right...if only they would value they actual consumer of the content!  Although sports fans probably don't mind getting all 16 channels of ESPN but they probably do mind that the only way to get some channels is to go through the right ISP!
Carol Wilson
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Carol Wilson,
User Rank: Blogger
11/27/2013 | 2:17:19 PM
Re: Licensing
The content guys are too addicted to the money they make from the big deals with cable and IPTV players - in many respects, it's the content folks driving these megachannel lineups. You can't get ESPN without also getting their 16 other channels. 

So I put some of the blame for the current bloated systems on the greed of the content folks as well. 
bosco_pcs
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bosco_pcs,
User Rank: Light Beer
11/27/2013 | 1:55:41 PM
Re: Licensing
Maybe one shouldn't broadside SV when Intel's track record in branching out is not so pristine, to put it diplomatically. Its management is great in operational excellence, but innovations and out-of-the-box thinking? Readers can be their own judge
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
11/27/2013 | 1:54:51 PM
Re: Licensing
Meanwhile we are still stuck with cable companies etc. who force us to pay for extra unwanted channels just so that we can see the few channels that we can't find on the internet.  It would be wonderful if we could only get the content providers to open their thinking and sell to Intel, Microsoft, Apple, and anybody else who wants to distribute their content!
Carol Wilson
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Carol Wilson,
User Rank: Blogger
11/27/2013 | 12:23:32 PM
Re: Licensing
So Craig, you missed a great revenue opportunity. You could be advising Silicon Valley giants to stay as far away from video entertainment as possible and saving them millions in the process. 

Come to think of it, I could have done the same thing...me or anyone of several dozen folks I can name. 
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