Intel is poised to launch what could be the biggest over-the-top threat to the pay TV industry yet — if it manages to overcome some huge hurdles.
This year, the chip giant plans to become one of the first companies to try to directly steal away pay TV subscribers using the broadband pipes supplied by MSOs and telcos.
Sometime in 2013, the company expects to debut a broadband-delivered TV service that includes “proper” live television and on-demand content, using its own set-top box, according to Erik Huggers, corporate vice president and general manager of Intel Media. The service will win customers away from current TV providers based on features — not price — he said.
“I think we can bring an incredible television experience via the Internet to consumers,” Huggers said, speaking last week at AllThingsD’s media conference. “What this is not about … is a value play.”
Intel has approached major media companies about licensing deals, Huggers said. He declined to say whether the company has secured any distribution agreements. The Intel Media service — the company would not say what the brand name will be — won’t deliver “pure a la carte,” but will provide more fl exible bundling options.
“I think there is an opportunity to create smarter bundles,” Huggers said. But, he added, “I don’t believe the industry is ready for pure a la carte.”
Programmers who have been approached by Intel are wary of upsetting the traditional pay TV apple cart. But if the price and the terms are right, Intel will get its deals done, according to an executive at a large media company familiar with Intel’s plans.
“We’re always concerned about [angering] our traditional partners,” the executive said. “But at the same time, we welcome new entrants.”
Still, analysts are skeptical Intel can make a dent in the multibillion-dollar pay TV industry. “In the end, it’s likely that Intel will overemphasize the role of the technology … and fail to understand that it’s not silicon or even quality that matters most to viewers: It’s convenient access that will rule the day,” Forrester Research analyst James McQuivey said.
Huggers, who joined Intel in January 2011, previously was director of the BBC’s Future Media & Technology division, where he oversaw the launch of its iPlayer online video service. Before that, he worked at Microsoft, leading global business development for Windows Media Technologies.
People thought Microsoft was crazy for launching the Xbox game console a decade ago, he said: “Now it’s a major business.” Last week, Microsoft announced it has shipped 76 million Xbox units worldwide to date.
But an industry analyst who has advised Intel Media on its strategy, pointed out that many companies have tried to launch standalone set-top boxes and accompanying services — and failed. “When there is an agenda and a whole division in place, sometimes things just gain momentum for no reason,” the analyst said.
Huggers said he has been building the Intel Media group, which works from its own dedicated offi ce building, for the last 12 months. The group includes executives from Intel as well as Apple, Jawbone, Microsoft, the BBC, Netflix and Google.
The over-the-top service will be delivered via an Intel-powered set-top box “with beautiful industrial design.” The set-top will include a camera that will identify viewers, to deliver personalized features and content recommendations to users.
TV THAT KNOWS YOU
“It’s personal, it learns about you, it cares about who you are,” Huggers said. “We think there’s real value in identifying who’s watching TV.”
Asked whether the camera in the set-top would be disconcerting for consumers, Huggers said users would be able to shut off the feature. Ultimately, he said, being able to identify an individual TV viewer will provide a better overall user experience.
As for how bandwidth-usage caps by Internet- service providers might affect Intel’s Internet TV service, Huggers said: “Our analysis is that with the service we are building, with the amount of bits we will pump in people’s living rooms, we will fit within those caps. We are betting those caps are going to rise … or ultimately go away.”