Intel Media’s OTT Play Could Be D.O.A. - Multichannel

Intel Media’s OTT Play Could Be D.O.A.

SOURCES: ASPIRING ‘VIRTUAL’ MSO SEEKING PARTNERS
Author:
Publish date:
Social count:
0

Intel Media has sought out multiple partners, including John Malone’s Liberty Media, to help it salvage a plan to develop and launch an over-the-top “virtual” pay TV service, two industry sources told Multichannel News.

The service, reportedly to be called OnCue, is in jeopardy of missing its 2013 launch window and faces the possibility of being scotched altogether, sources said. Intel has had trouble securing enough content deals to create a compelling service and support for the project from the chipmaker’s brass is waning rapidly, according to sources.

Reports claim that Intel Media has been reaching far and wide for strategic backing and potential content partners and to keep the service alive. AllThingsD reported last Thursday (Sept. 26) that Intel Media has sought to bring on Amazon and Samsung as strategic backers, with Variety adding on Friday that the budding pay TV firm has also reached out to — and been spurned by — Netflix.

Two industry sources told Multichannel News that Intel Media has also tried to engage with Liberty Media or its MSO unit, Liberty Global, about a partnership that would involve financial backing and give the project some additional muscle and validation. However, those inquiries have generated “zero interest” from Liberty, which now owns 27.3% of U.S. cable MSO Charter Communications.

Intel Media is “getting desperate,” said a source who is familiar with project’s ongoing challenges.

An Intel Media spokesman declined to comment. Liberty Global had not commented by press time last week.

Intel Media vice president and general manager Erik Huggers, the former BBC and Microsoft exec who is heading the project, has “negative support” from the higher ups at Intel, according to a source. That’s in part because Intel Media’s plans are not core to the business, partly because it’s had trouble securing programming distribution rights and because the size of its potential market is smaller than originally envisioned.

Based on recent comments, new Intel CEO Brian Krzanich has given the video project a cool reception. “We believe we have a great user interface and the compression-decompression technology is fantastic,” Krzanich told Reuters in June. “But in the end, if we want to provide that service it comes down to content. We are not big content players.”

Another source said the OTT project has alienated executives in charge of Intel’s DOCSIS and set-top box chips, fearful a competitive pay TV service will cause cable operators look elsewhere for those supplies.

Should Intel Media decide to scale back its plans for a virtual MSO or shut it down, it could try to sell or license the intellectual property it has created for the service, or try to weave it into products that are targeted to cable operators and other service providers.

Earlier this month, Intel Media confirmed that the unit was testing its OTT subscription-video service in Oregon, Northern California and Arizona. It hasn’t announced any programming deals yet, but Intel Media execs have openly discussed plans to attack the saturated pay TV market with flexible bundling options.

In a note issued in June, Craig Moffett, senior research analyst with MoffettNathanson Research, said Intel Media’s success as a virtual MSO would hinge on its ability to undercut traditional pay TV pricing by either acquiring content more cheaply, offering smaller packages, or marketing a cheaper service. Of those three paths, “[n]one seem terribly likely,” he wrote in his grim assessment.

Google and Sony are among others that are reportedly developing virtual MSO services.

TAKEAWAY

With its “virtual MSO” plan in jeopardy of missing its launch window, Intel Media has turned to cable legend John Malone’s Liberty Media, among others, for backing.

Related