Verizon Snatches Intel Media Assets

In another video deal, Verizon buys Intel's OnCue cloud TV platform for an undisclosed sum, with plans to integrate it into both FiOS TV and mobile operations.

Alan Breznick, Cable/Video Practice Leader, Light Reading

January 21, 2014

3 Min Read
Verizon Snatches Intel Media Assets

In another move to boost its cloud-based multiscreen video capabilities, Verizon plans to buy the assets of Intel Media and integrate them into its FiOS TV and mobile media operations.

Verizon Communications Inc. (NYSE: VZ) announced early Tuesday morning that it will buy the intellectual property rights and other assets behind Intel Media's OnCue Cloud TV platform, including the 350-employee unit of Intel Corp. (Nasdaq: INTC) working on the platform. Terms of the deal were not disclosed.

Intel, which has been shopping around OnCue since the early fall, had reportedly been seeking $500 million for the servers, set-tops, and software that would have been the foundation of a new over-the-top (OTT) pay-TV service. But, with such other potential suitors as AT&T Inc. (NYSE: T), Samsung Corp. , and Liberty Global Inc. (Nasdaq: LBTY) reportedly dropping out of the bidding, industry observers believe that Verizon may have snapped up Intel Media from the chipmaker for considerably less. (See Intel Kissing OTT Goodbye?.)

With the purchase, expected to close by April, Verizon intends to move even more quickly into cloud-based delivery of video services, both over its FiOS fiber-to-the-premises (FTTP) architecture and its wireless network. In the press release announcing the buyout, the company said the deal "will accelerate the availability of next-generation video services, both integrated with Verizon FiOS fiber-optic networks and delivered 'over the top' to any device."

Further, Verizon said it expects to use OnCue to "integrate IP-based TV services with FiOS video to further differentiate FiOS video from traditional cable TV offerings and reduce ongoing deployment costs." With OnCue on board, the telco also said it expects FiOS video customers to "benefit from elegant search and discovery, interactivity, and cross-screen ease of use, integrated with the Verizon Wireless 4G LTE network."

On the company's year-end earnings call Tuesday morning, Verizon CFO Fran Shammo elaborated a bit further on the deal in response to analyst questions. Shammo said Verizon executives looked at either buying a property like OnCue or building their own cloud-based TV platform. In the end, they decided that buying OnCue was the better way to go.

"This really accelerates us," Shammo said. "We are positioning ourselves strategically."

But, as in the past, Shammo indicated that Verizon still has no plans to go beyond its wired footprint and launch its own national OTT video service. Verizon now covers nearly 19 million homes with its FiOS network, with no plans to expand it further.

Notwithstanding the company's rhetoric, some industry observers are not sure exactly what OnCue gives Verizon that it didn't already have. With its previous FTTP, wireless, and content assets, plus its recent pickups of cloud-based video specialists EdgeCast Networks Inc. and upLynk, Verizon had already been thought to possess the capability to deliver cloud-based video and OTT services. (See Verizon Beefs Up TVE Unit and Verizon To Buy EdgeCast.)

The key to the deal may be the software and user interface that Verizon will gain from Intel. While FiOS TV continues to gain new customers, its user interface has not been upgraded much in a while. Meanwhile, such key cable rivals as Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC) are now deploying cloud-based guides to their video subscribers. (See TW Cable Beams UI to Cloud.)

Verizon said it aims to retain "substantially all" of the 350 Intel Media employees in Santa Clara, Calif. Most notably, that group includes Intel Media's current management team, which is headed by Erik Huggers, corporate vice president and general manager.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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