Intel May Muscle into Crowded Streaming Internet TV Business
Intel is next in the long line of companies dreaming of killing cable and launching a streaming Internet TV subscription service, according to a Wall Street Journal report. The Journal says the company has been meeting with content providers, hinted at building its own set-top box and hopes to launch the service by the end of 2012.
Though details are sparse, it sounds like Intel isn't simply making a Netflix or Hulu knockoff. Instead, Intel is attempting to bump the infrastructure of traditional cable TV subscriptions onto the Internet with a "virtual cable operator" that would "offer U.S. TV channels nationwide over the Internet in a bundle similar to subscriptions sold by cable- and satellite-TV operators."
Overthrowing traditional cable has been a long-standing aspiration for many other bigger companies, so it's a little strange to hear that Intel -- typically content building the chips that power PCs, OS X machines, and now smartphones -- is trying to succeed where Apple, Microsoft and Google (Intel briefly supported Google TV with its processors) have all failed.
One problem I can see right away are how oversaturated we are with set-top boxes for streaming content. Unless Intel options out its cable service to other devices, likely in the form of apps, consumers would be stuck with yet another little plastic box to share bandwidth with Internet-connected TVs and stack atop their Apple TV, Roku, TiVo, and Xbox 360.
Also, in the marketing scheme of things, Intel has comparatively little brand awareness. It's a household name, but only in certain neighborhoods. And when consumers are faced with the choice of going with familiar and beloved brands, like Apple or Amazon, choosing Intel somehow seems all the less likely.
Then there's the money. It's expensive securing premium content and can get even more expensive trying to keep it -- just think of how Netflix lost Starz even after offering $300 million for a slightly longer contract. Plus, most premium content providers aren't willing to relinquish their goods for any price. HBO is a great example here. HBO has its own streaming service, HBO Go, which is slowly being released to other devices but still requires an old-school monthly cable subscription.
Not to say that Intel doesn't have the money; its current market value is $137 billion, and when you compare that to potential competitors like Netflix ($6 billion), Intel's chances of scoring premium goods improves. However, compare that to Amazon ($83 billion) or Apple ($521 billion), add in the Journal’s projected cost of yearly content licenses ($38 billion), and financial feasibility gets even more dubious.