Friday, September 27, 2013

Intel TV Seeking Partners?

Intel TV, Intel's Web-based streaming video service, was supposed, to launch by the end of 2013. Most observers have guessed that Intel would not make that deadline, in part because Intel has been slow to announce the key content deals that would anchor its service, namely the channels subscribers tend to expect when they buy any video entertainment service from a cable, satellite or telco TV provider.

Now there is a report that Intel is looking for partners, presumably partners with customer bases or existing programming rights that could be leveraged. 

But Intel also faces Sony Corp., Google and Apple, all of which have their own plans or interest in launching such a service.

The problem attackers will have, when trying to disrupt the traditional TV business, is that if the content owners control the value proposition, disruption is not possible unless those content owners agree to be disrupted.

In other words, it is the content that provides the value, not so much the delivery network. To disintermediate the distributors, the content owners will have to conclude that they can make as much, if not more money, by supporting Internet-direct suppliers such as Intel.

For consumers, there are direct implications as well. Most people probably assume that one advantage of Internet delivery is the ability to watch content on any device, nearly anywhere, for less money.

To be sure, those value dimensions are not necessarily linked. Value could be "watch on any device," or "watch anywhere" or "watch for less money" or any combination.

But the "watch for less money" remains one of the assumptions nobody can be too sure about.  Intel, for example, is offering to pay as much as 75 percent more than cable operators do, to get the content Intel needs to provide a viable competitor to cable, satellite or telco TV offers.

There are other elements of its business plan, of course, but it is hard to sell at a discount to the market leaders when the cost of goods might be that much higher.

Intel hopes it can create a successful, and sizable new business selling video entertainment delivered "over the top." But don't count on that service saving you money, or "disrupting" the video subscription business. It won't.

As some have suggested, the new service might require that a customer first buy a video subscription service, then pay for the Intel offerings, and use an Intel decoder box as well.  Intel’s web TV service will not offer la carte access to channels and networks, either.

That is a tough value proposition.

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