Intel Developing Web-Based TV Service?

Intel Corp. is developing an Internet-based TV service that it hopes to sell to U.S. consumers, a strategic shift for the chip maker that makes it the latest technology company to look at a foray in the pay-TV business, according to the Wall Street Journal.


Intel's interest in doing so is one more example of a firm deciding it wants to "move up the stack" in terms of end user value. Instead of supplying components to other retailers, Intel would vault up to become a service provider itself. 


Intel's "interest" does not mean it will succeed. As other contestants have found, content licensing, of the sorts of content most people want to pay for, is quite expensive. Intel doesn't appear to have any programming contracts locked up, nor is it even clear most major content owners want to do so.


In a phrase, "virtual" cable operators might lead to equally "virtual" profits. Incumbent cable, satellite and telecommunications companies pay nearly $38 billion each year to license TV channels. And that's just one of the revenue streams content owners reap. The networks also earn about $22.6 billion in advertising as well. 


Nor is it likely a new generation of "virtual" providers would be willing to sponsor "hundreds" of channels. Instead, they likely would focus on a smaller subset of highly-viewed channels. In other words, virtual distributors would represent less demand for network fare, not more, or even "the same amounts" of demand. 

If Intel simply wanted to create one more brand name among providers of "traditional" cable TV, it would have better prospects. Content owners, after all, are used to supplying their content to all sorts of distributors who use the standard subscription TV model.


Streaming, though, raises issues, notably the danger of destroying the older distributor model while a new model is built. Now, even that wouldn't be a big stumbling block if content owners were relatively confident that the new model would generate more revenue than the current model. But few seem to believe that. 


The Intel move is not out of character, in a sense. Intel has for some time believed it must gain a bigger foothold in the video entertainment business. In 2005, for example, Intel invested in Revelations Entertainment, a venture aimed at distributing movies over the Internet on the  same day they open in movie theaters.


Intel also recently invested in StreamPlanet, a company that provides a technology platform for video content owners and distributors to stream and monetize their content, for example. 


Intel Capital’s Digital has invested in a number of firms to drive its "SmartTV initiative." Intel hopes to create an ecosystem that includes home networking silicon, platform software, connected devices, and services. 


Intel is particularly interested in TV platforms operating systems, TV apps, social TV, and various video and content services including gaming, advertising, and audience measurement. 


Intel's recent investments include BlackArrow, Digital Chocolate, Exent Technologies, iControl Networks, Kabam, Kaltura, Transgaming, UIEvolution, Videon Central, Verismo Networks, and YuMe, for example.