Intel Corp., the world’s largest chipmaker, had strong plans to launch a subscription-based TV-service later this year. According to a new report, that plan may not work as the company is seeking a partner, either with a customer base and/or with rights to distribute content, and may therefore delay the launch of the initiative.
Intel is changing its strategy for its planned Web-based television service and hence may miss a stated goal of launching service by year-end, reports BusinessWeek. Intel’s TV efforts have slowed down when Brian Krzanich became the chief executive officer of Intel in May. The new approach proposed by Intel’s CEO suggests that the chip designer, which has built an advanced set-top box, needs an ally with existing customers and marketing experience to make its TV project a success.
“For Intel or anyone else to launch and pay the networks what they are getting from the cable companies makes it a very difficult proposition,” said Bernard Gershon, a digital television consultant.
Earlier this year it was reported that the world’s largest chipmaker has made a substantial progress with negotiations with Time Warner, NBC Universal and Viacom over content distribution rights. It was said that Intel was about to begin financial consultations with News Corp., owner of the Fox film and TV businesses, whereas talks with Walt Disney Co. and CBS Corp. were at an initial stage.
“Slowing progress toward starting the TV service marks a setback for Intel’s broader effort to diversify its revenue and lessen its dependence on the declining personal-computer market for growth. Investors have low expectations for success. They have talked about being not just the set-top box but the ecosystem. In the past, when Intel has tried to mess with ecosystems outside of PCs, they have been unsuccessful. If they shut it down, it might be a good thing, because it would mean they are focusing on markets where they have core competencies. What does Intel know about media distribution,” said Doug Freedman, an analyst at RBC Capital Markets.
Andy Grove, a co-founder and a former chief executive of Intel, once said in his book “Only Paranoid Survive” that when technology companies make it into non-core businesses, they rather distract attention from their failures in the core business than create new significant revenue streams. Intel has clearly missed a number of ultra-mobile opportunities, which were within its core competence, under the previous chief exec, who then initiated a pet TV project. The new CEO wants to concentrate on what Intel does best: develop and produce leading-edge microprocessors for every application possible.
Intel declined to comment on the news-story.
The base of Intel’s smart Internet TV service is expected to be a set-top-box powered by a specially-designed Intel system-on-chip that will be equipped with a camera to recognize the users and provide them relevant programs or services. The STB will provide live television, a collection of programs and TV-shows aired in the past, video rental service as well as other services. All-in-all, Intel wants to create an all-in-one solution that will provide convenience, but will not necessarily offer ways to cut-down TV bills. The new STB and service will not carry Intel brand-name.
At first glance, Intel’s TV service is nothing special as it will not introduce anything that will clearly differentiate it from the established market players. Quite naturally, the virtual TV operator will also not offer exclusive programs or TV-shows, something that Amazon and Microsoft Corp. plan to unveil for their Kindle and Xbox Live services in the newer future. However, a major advantage of the Intel’s smart TV service will be its compatibility with mobile devices.
Intel's new Internet-based TV service also will be available on mobile devices, but it is unclear which will be the first.
"I absolutely and completely believe in the world of multiplatform ... anytime, anyplace, anywhere. Consumers and audiences expect that nowadays. Yes, we will make services available on other sockets, on other devices, and on other products just like at the BBC. But to get from nothing to 650 devices at the BBC literally took four years. That doesn't happen overnight, but yeah, you bet, that's completely part of the strategy," said Erik Huggers, vice president and general manager of Intel Media.