Why Did Verizon Buy OnCue?

That's the one thing that nobody has convincingly answered in the Verizon/Intel Media deal yet.

Mari Silbey, Senior Editor, Cable/Video

January 22, 2014

2 Min Read
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There's one thing that's puzzled me ever since rumors of a Verizon deal to purchase Intel Media's OnCue assets first surfaced. And now that the deal is done, I'm no less mystified by it. (See Verizon Snatches Intel Media Assets.)

Many have reasoned that Intel Corp. (Nasdaq: INTC)'s OnCue could give Verizon Communications Inc. (NYSE: VZ) the boost it needs to make the transition to a full IPTV service. That would help the company battle against Comcast Corp. (Nasdaq: CMCSA, CMCSK) and its growing cloud-based Xfinity platform, and it would extend Verizon's footprint across the country in preparation for the day when service providers are expected to compete nationally.

There's just one problem with the logic. Verizon doesn't need Intel to make any of its IPTV dreams come true.

Three years ago at CES, Verizon executive Joe Ambeault told me that the company had already worked to overhaul its infrastructure so it could deliver everything over IP. Ambeault painted the picture of FiOS TV as an app, and he suggested that while many business challenges remained, the technical hurdles to making that idea a reality were already more or less solved.

Fast forward to today and I have confirmation from an expert source in the trenches. Technically speaking, Verizon has the equipment and the ability to deliver television over IP already, even without the OnCue assets.

All of which leads me back to one question: Why did Verizon bother to buy Intel's dying TV service?

My only conclusion at this point is that there's a sexy combination of software and hardware in the OnCue assets that Verizon thinks will give it a more compelling offering for consumers. Despite being a software leader five or so years ago, Verizon hasn't invested much in its TV interface in ages. It could partner to bring its guide up to speed quickly, but I can see why bringing a finished product and more expertise in house would be appealing.

On the hardware front, Verizon's got plenty of set-top options at its disposal. But maybe Intel has invented something new; something innovative like Fanhattan LLC 's tiny little box that connects to a motion-controlled remote.

On the other hand, maybe Verizon just couldn't put its own pieces together for the IPTV transition. Maybe so many of the components are locked up in different corporate silos that it's been impossible for the company to make the logistics work. Maybe that's why the big bosses decided to bring OnCue into the fold instead.

I don't know the reason why Verizon pulled the trigger on the Intel deal. However, at the rumored discount price of $200 million, maybe it also doesn't matter too much. In the end, it's only what Verizon does with the investment that anyone will really care about.

— Mari Silbey, special to Light Reading

About the Author

Mari Silbey

Senior Editor, Cable/Video

Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.

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