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OTT

Intel Kissing OTT Goodbye?

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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craigleddy 11/27/2013 | 11:09:36 AM
Re: Licensing It's astonishing, isn't it? How many times will Silicon Valley companies try to conquer television, only to get their heads handed to them? Intel did a lot of things right but the economics of TV content are an obvious obstacle. 
KBode 11/27/2013 | 10:41:04 AM
Re: Licensing Agreed. In early press statements they were so certain that THEY would be the ones to break the content licensing logjam that companies like Apple, Google, Microsoft and many others could not. I remember statements suggesting that those companies failed because they simply weren't smart or aggressive enough, not that the entire licensing field is rigged specifically to prevent these kinds of disruptive solutions from coming to market.

The $500 million price tag certainly seems ambitious.
DOShea 11/27/2013 | 10:28:05 AM
Licensing How are giant companies like Intel and Microsoft getting this far into OTT ventures without realizing the abomination of content licensing economics? They might want to have someone at least monitor the industry headlines before they invest hundreds of millions in this kind of thing.
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