The Wall Street Journal has reported that Intel is developing an over-the-top video service for US consumers, apparently positioned as a ‘virtual cable operator’ which would sell US TV channels nationwide in the manner of a traditional pay-TV ‘bundle’.
The vehicle for the service would, according to the WSJ, be an Intel Internet-capable set-top box.
The news is intriguing for several reasons: it was not that long ago that Intel was reported to be abandoning efforts to sell its processors to manufacturers of connected TVs, a strategy it launched in 2007.
Intel did say at the time that it would maintain a presence in the set-top box market, where it has met with a measure of success through deals with Comcast in the US and Liberty Global in Europe. Those agreements have been tempered, however, by the recent loss of its high-profile deal with Google TV, which has now chosen to go with the ARM-based Marvell Armada 1500 chipset instead.
Intel’s move may, in fact, be a reaction to this.
Of greater significance, perhaps, is the notion of a ‘virtual cable operator’, which runs against the apparent trend towards distributors being disintermediated by the Internet.
In fact, farncombe was arguing two years ago that a new type of intermediary online player was required to make the OTT video sector more efficient and economic.
Farncombe postulated at the time that there were two possible models for such intermediaries:
- In order to differentiate themselves from their competitors, they would invest in exclusive premium content on their own account or with a partner; or
- They would regard their strength as lying within their role as “commodity” providers of access to multiple content providers, and would not seek to invest in the video platforms themselves or in “direct” content agreements.
Although it’s not yet clear whether Intel intends to invest in premium content, it appears to be following the first model rather than the second.