Intel Is Already Giving Up Its TV Ambitions

The television industry does not like newcomers. Media distributors have their own content deals and defend their territories like prized possessions -- and outsiders aren't welcome. That's one reason why it's not surprising that new reports say Intel (NASDAQ: INTC  ) is trying to sell its set-top box project to Verizon Communications (NYSE: VZ  ) .

Buffering content deals
Intel has been working on a streaming content service for the past few years and hired more than 300 employees to get a device off the ground. But so far it's only been released to Intel staffers for testing. Despite talking with major content distributors including Time Warner and Disney, Intel hasn't been able to nail down any content contracts.

That's inhibited the company's public timeline for releasing a set-top box by the end of this year.

According to AllThingsD, Verizon is in talks with Intel to possibly buy Intel Media, the division of the company working on the streaming box. The move would make a lot more sense for Verizon than a set-top box ever made for Intel. Verizon already delivers cable channels to about 5 million customers through its FiOS TV service and has an online streaming and DVD service partnership with Outerwall through Redbox Instant. Meanwhile, Intel doesn't have a great track record for selling devices directly to consumers and has virtually no experience procuring television content. On top of that, margins would be low for chips powering and Intel set-top box, which would make it hard to bring in significant profits for Intel, even if the device were successful.

No deal has been announced yet, and it's still not clear how Verizon would incorporate an Intel Media purchase. Verizon could adapt the box to its current FiOS service or use it for the Redbox Instant partnership. Intel could also keep partial control if a deal goes through.

But Intel investors should be pleased the company is looking to step off of a path it really had no business walking down in the first place. Much stronger competitors like Apple and Roku already have set-top boxes, while Amazon.com is working on such a device and has millions of content subscribers, as does Netflix. The likelihood of Intel bursting onto the scene and making any significant waves in the space is improbable. Even if Intel was able to secure the programming it needed to bring a successful device to market, the number of strong set-top competitors would squeeze an already low-margin device.

Got iPad?
Apple's newest iPad Mini with Retina display might be hard to come by this quarter, given all the reports of supply constraints. Well, we're going to be sure to get a few -- and give them away! That's right: For the first time ever, The Motley Fool is hosting a contest where you can win a free iPad Mini with Retina display. All you have to do is tell us why you love The Motley Fool by clicking here! We'll pick the three most Foolish submissions to receive a free iPad Mini with Retina display.

See full terms and conditions by clicking here


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 02, 2013, at 12:20 PM, techy46 wrote:

    Ultimately "live" TV will die because it really isn't live. The ability to get recorded content over the web that's more entertaining then contrived content composed of over used plots and reruns is going to finally kill the $100 month subscription. Isn't it amazing that we considering paying for something that was once free progress. A similar fate awaits web based advertising like the noise of the left side of this page.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2709520, ~/Articles/ArticleHandler.aspx, 11/20/2014 10:09:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement