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Intel Lacked Volume For An OTT TV Play

CEO Tells Re/Code Why Company Unplugged Intel Media’s Virtual MSO Project 1/03/2014 10:37 AM Eastern

Intel still isn’t saying whether it’s trying to sell its OTT video assets to potential suitors believed to include Verizon Communications, but company CEO Brian Krzanich has expressed why the company has backed away from launching its own virtual MSO service.

“When you go and play with the content guys, it’s all about volume. And we come at it with no background, no experience, no volume,” Krzanich told Re/code, the just-launched technology news site that includes NBCUniversal among its backers. “We were ramping from virtually zero and so what we’ve said is we are out looking for a partner that can help us scale that volume at a much quicker rate.” 

Those comments fit well what industry sources told Multichannel News last September, when word spread that Intel Media’s budding OnCue service was in jeopardy of missing its 2013 launch window and mulling a possible sale. Despite offering a handsome premium to programmers, Intel Media had a hard time securing enough distribution rights to create a viable subscription TV service. Plus it found that the “scale opportunity for a virtual MSO service is smaller than they had envisioned,” a source familiar with the project said at the time.

Krzanich told the Re/code that Intel Media developed some terrific technology and a unique service approach, but that the company  couldn’t pull together the content deals to pull off a service to support it.

“It’s actually a very good product, if you take a look at the hardware and the technology. We’ve said pretty repeatedly that the technology is quite good. I could get into the ‘hows’ but it really does have a great user interface. This concept of having three days of everything that is on TV at your instantaneous access is really unique,” he said. “But at the end of the day, just like when you go home and watch TV, it’s all about content.”

There’s been little recent movement regarding a deal for the technology developed by Intel Media. Reports in November suggested that Intel was in deep discussion with Verizon, and was asking for $500 million for those assets. A source said Intel’s asking price was major “sticking point” in those negotiations, believing that the telco might be more willing to pay a figure that’s “definitely below $300 million.”

During that part of the cycle, sources also indicated that Verizon had tried unsuccessfully to get Liberty Media to enter a joint bid for Intel Media’s OTT TV assets.

Although a successful deal for those assets could eventually help Verizon develop a subscription video service it could sell outside its FiOS TV footprint, once it was able to secure the necessary distribution rights to do so, it’s believed that it’s nearer-term plans would be to accelerate its ability to develop a market equivalent to X1, Comcast’s new IP-capable, cloud-based video platform.

November