NEW YORK -- By targeting young, connected consumers with a more personalized experience and "smarter bundles," Intel Corp. believes its coming over-the-top video service will help to expand an already saturated pay television market.
Cord-cutting and cord-shaving "are real," said Eric Free, the VP and general manager of content and services for the recently created Intel Media unit, here at the Next TV Summit put on by Multichannel News and Broadcasting & Cable. He acknowledged that the cord-cutting trend is small "but growing" and will continue to increase as younger consumers move away from a pay-TV universe that's dominated by cable operators, telcos and satellite TV operators.
Intel Media is moving ahead on a plan to launch a cloud-based, OTT service later this year that will feature a mix of live and on-demand content, plus interactive apps that aim to make it easier for customers to discover and access content on multiple screen types, and to make the overall experience more personal. Intel will support the service in homes via its own broadband-connected device. (See Intel Preps Its Internet TV Service.)
Intel hasn’t announced a brand name for the service, but it will go after customers directly (versus partnering with a cable operator, for instance). It's currently testing the service with employees in three markets on the West Coast ahead of the formal product launch later this year, Free said.
Intel Media, Free said, intends to preserve pay-TV's dual-revenue stream of subscriptions and advertising. On the latter, the company promises to offer a more personal and targeted advertising platform than what today's pay-TV operators provide.
Still, expanding the pay-TV universe will be a tall order. SNL Kagan reported Wednesday that U.S. pay-TV providers added just 46,000 video subs in 2012, for a total of 100.4 million.
Free said Intel Media won't try to undercut the pricing of its competition or deliver video on an a la carte basis. Instead, the company will look to offer "smarter" bundles. Free didn't outline precisely how that will be done, but did say that Intel Media likes "the concept of more thematic bundles."
Free downplayed the threat Intel Media's new service will face from broadband caps and metered usage models. The market Intel is targeting, he believes, will pay more for a higher cap to support their individual lifestyles, including how they access video. He's also counting on new, more efficient codecs such as H.265/HEVC to help consumers access more video with fewer bits.
"If the caps change, we'll change it from a business perspective," said Free, who believes caps will continue to grow as consumers usage of OTT video continues to rise.
Bottom line, Intel Media thinks the younger set is dissatisfied with what they're getting from existing pay-TV providers and that the technology and business rules are now there to support a fully-fledged OTT-based video services.
"The time is now for change," Free said.