Intel in Talks to Hand Over its Internet TV Project to Verizon

Intel has invested heavily in its plan to stream television over the Internet, but securing access to channels has been a challenge. The company is reportedly now in advanced negotiations to sell all or part of its yet-to-be-launched venture to Verizon, according to a person familiar with the talks. Intel was originally hoping to launch its service by year’s end. Tech companies including Sony and Google have plans to launch similar services, but have encountered some of the same challenges as Intel.

“Sources said the chipmaker is close to a deal to hand over control of Intel Media, the unit that has been trying to build a Web-based subscription TV service, to Verizon, the telco that already operates a pay TV service,” explains AllThingsD. “People familiar with the talks said the two companies are in advanced negotiations. But it’s unclear whether Verizon would take control of the entire Intel Media unit, or if Intel would retain a piece of the Web TV project or a say in its operations.”

Erik Huggers was hired by Intel in 2011 to develop an Intel-branded pay TV service and Intel-built STB. By February of this year, Huggers was still promising that the OnCue service would launch by the end of 2013. In addition to Huggers’ team, thousands of Intel employees have been testing the service.

“For the past couple of years Intel has been planning a service that would stream TV channels over the Internet, and has made a significant investment in the operation, which now involves more than 350 people,” reports The Wall Street Journal. “The company has developed an advanced set-top box that was widely praised by media executives as significantly easier to use than boxes offered by traditional cable operators.”

While Intel has met with media giants such as Disney, Viacom, Time Warner and Comcast’s NBCUniversal, no deals have been announced.

“Some TV programmers will offer their content only if several peers of similar size jump in, creating a chicken-and-egg problem for Intel, media executives have said. Price has also been a big barrier: programmers are insisting on a premium because they don’t want to disadvantage the cable and satellite companies that are their biggest customers,” explains WSJ.

“Some smaller TV-content owners, meanwhile, have contractual obligations with their pay TV partners that limit their ability to sell content to a company like Intel, media executives say. It isn’t clear whether those restrictions would become moot in the event that Verizon the venture.”

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