Erik Huggers, the former Intel Media exec who headed up OnCue prior to its sale to Verizon Communications last year, is still a big believer in over-the-top video and its ability to change and disrupt the pay-TV landscape.

Huggers (pictured), now a member of the supervisory board at Germany-based mass media company ProSiebenSat.1 Media AG, expressed as much this week in a column that also provided a dim view of the traditional pay-TV market and its future prospects.  

For starters, he recalls pitching streaming media to the original Endemol Entertainment board in the mid-1990s as he tried (and largely failed, apparently) to convince them that “TV was going to be just another application on the Internet.”

Fast-forward to today, and that view is prescient, as OTT is all the rage, as Nickelodeon, HBO, CBS, Dish Network (via new Sling TV service), and John Hendricks’ new offering, CuriosityStream, to name just a few, launch or prepare to introduce direct-to-consumer, broadband-fed offerings.

“It’s amazing that it took this long, but we are finally witnessing changes that will unleash the perfect storm,” noted Huggers, who departed Verizon a few months after the telco snapped up the OnCue assets.

And that’s not great news for the pay-TV industry, he added, pointing out that  his two kids don’t watch any linear television as they are drawn to sources like Netflix, Amazon and YouTube, and “could not be less interested in” Comcast’s TV service.  

OTT services such as Netflix and Amazon “have stripped most channel brand attribution and have commoditized its value,” he explained. “Combine that with big original programing budgets from those same players and you can see the writing on the wall for the decline of linear PayTV services.”

He also talked up the shift to digital advertising, and wondering if shifting TV ad budgets will continue to gravitate toward premium video content. On that note, check out our special section in this week’s issue on programmatic TV, where we offer a variety of examples (subscription required) of how digital-like automation is coming to the TV ad scene.

And he's definitely not on the cable industry's side when it comes to recent regulatory activity, holding that the FCC’s decision to redefine broadband as 25 Mbps (downstream) and the plan to reclassify broadband as a Title II “will safeguard OTT services.”

While his original vision for OnCue remains in question as Verizon figures out how those assets will factor into its own virtual MVPD offerings, it’s quite clear that Huggers still believes that the pay-TV market faces its biggest challenge yet.

Verizon Communications intends to launch an Internet-fed video service spawned by its acquisition of Intel Media’s OnCue assets by mid-2015, company CEO Lowell McAdam said Thursday at the Goldman Sachs Communacopia Conference in New York, according to multiple reports.

The coming service, a seeming departure from the traditional pay-TV service delivered via Verizon’s FiOS TV platform, will enter the picture as others pursue similar over-the-top TV strategies, including Dish Network’s single-stream multiscreen offering that’s expected to launch later this year, and the service that Sony is developing as it carves out distribution deals with Viacom and other programming partners. 

And apparently Verizon’s discussions with programmers about securing digital rights for a broadband-based subscription TV service have been improving.

"It's moved from a stiff-arm to more of an embrace," he said, according to Reuters, noting that dialogue with broadcast TV networks and other content providers has been “changing dramatically” over the past six months to a year.

Verizon hasn’t announced how it will price and package the service, but expects it to include access to major broadcast channels (“the big four for sure”), and a lineup of “custom channels,” Deadline.com reported.

In June, questions swirled about how Verizon would utilize OnCue assets, with some sources claiming that the near-term plan was not to create an out-of-footprint, virtual MVPD service, but to instead use them to develop a next-gen platform that would help FiOS TV transition more of its offerings to IP and catch up to where Comcast is heading with its X1 platform. Now it seems that Verizon has been able to start locking up the kind of digital distribution rights it will need to create smaller, more personalized subscription bundles.

Verizon, which also operates a cloud-based video delivery system via the Verizon Digital Media Services (VDMS) unit, is also developing a live video service that will be delivered on its mobile network using bandwidth-friendly LTE multicast technology. Verizon CFO Fran Shammo said in July that Verizon Wireless plans to “go commercial” with such an offering as early as 2015.

It turns out that Erik Huggers is not the only former Intel Media exec who’s not sticking around for the ride after Verizon Communications snapped up the division and its over-the-top “OnCue” platform about five months ago, raising more questions about how the telco intends to proceed with those assets.

GigaOm reports that OnCue head of marketing Courtnee Westendorf and Eric Free, head of content and services, and Moe Khosravy, head of software development, decided to stay with Intel.

And another loss appears to be cable’s gain. Fraser Stirling, the former head of OnCue’s hardware engineering, joined Comcast last month. According to Stirling’s updated LinkedIn profile, the exec, who is also late of BskyB, is now serving as vice president, product strategy, management & hardware development at Comcast.

That shift in personnel, plus recent comments by Verizon CEO Lowell McAdam, have splashed more doubt that Verizon will use its new OnCue assets to create a “virtual” MSO that will deliver pay-TV packages over-the-top, and fulfill the original vision that Intel Media had for it.

That was the popular presumption when it was first rumored that Verizon was interested in buying OnCue and its team. But that’s not the story we were told at the time, and this recent string of activity seems to confirm what we were told when Verizon and several other interested parties were poking around OnCue.

Rather than viewing OnCue as its ticket for a virtual MVPD, people familiar with Verizon’s intensions said the near-term desire was not to create an out-of-footprint pay-TV service but to instead get its mitts on some key technology that would accelerate the development of a next-gen version of FiOS TV that would help it to catch up to Comcast and its cloud-fed X1 platform.

Soon after the deal was announced, we were likewise told that Verizon was eager to use OnCue to apply toward its IP video transition while also establishing independent command and control of its video hardware and software platform, a move that should help the telco trim CPE costs.

McAdam’s comments at last month's J.P. Morgan Global Technology, Media and Telecom conference seem to amplify the notion that Verizon isn’t being driven by a virtual MVPD strategy, at least in the near-term.

“The OnCue user interface and a platform that they built it on is obviously all-IP and we can transport that into our Verizon Media Server and make that system much easier to transform end-to-end, use different IP-based applications as we go forward," McAdam said. "So that's sort of the base case for purchasing that asset. But that group was built originally almost to create a linear TV offering as a pure over-the-top play…We don't think that model is particularly attractive because of the overall content cost.”

He instead pointed to “video jukebox sort of services," referring to Verizon’s own partnership with Redbox as well as OTT sources such as Hulu and Netflix, that allow consumers to pull content from a large cloud-based library and play it back on a wide range of devices. “I think that is a very attractive model for us.”

Bottom line: “We’re not in the mode of having 80 channels bundled running over OnCue for Verizon, but we are in the mode of having an over-the-top play that customers can pull down what they want, when they want it,” he said, noting that Verizon has talks underway with CBS, ABC and others. “But it can't be the bundled 10 channels together and force them to take it over-the-top, the way they have done in their current linear mode.”

Verizon still isn’t being super-specific about its OnCue-related plans, with the company noting this week that its intentions to “strategically utilize the OnCue technology and talent to grow our business” has not changed.

While some might think Verizon has suddenly abandoned plans to create a virtual MVPD, what we were told in the run-up to the deal shows that it wasn’t part of its near-term strategy all along.

Erik Huggers is exiting Verizon Communications roughly five months after the telco inked a deal to acquire OnCue, the advanced video assets that Intel had developed to form the basis of what was to become an ambitious "virtual" MSO service that sold pay-TV packages over-the-top.

Reuters first reported of Huggers’ departure on Friday (May 30), with Huggers telling the outlet that he had worked well with his boss at Verizon, head of product development Marni Walden. "There were no conflicts at all,” he told Reuters. “The technology is great, the team is great, the future is secure, the dream lives on. It's time to hand the baby over to someone else.”

Verizon confirmed that Huggers is leaving the company, adding that his departure does not alter the plans it has in store for the assets it acquired from Intel.

“We obtained a strong combination of technological and personnel assets from Intel Media. We intend to strategically utilize the OnCue technology and talent to grow our business. That has not changed,” Verizon spokesman Bill Kula said, in a statement.

Huggers also told The Wall Street Journal that Verizon is investing “quite significantly” in the 350-person Intel Media division that had undertaken the original OnCue effort, and that Verizon intends to move the group from Santa Clara, Calif., to a new facility in the Silicon Valley by the end of 2014. Huggers, rumored to be in the running for the lead job at Hulu when the future of Intel Media and the OnCue project was in doubt (Mike Hopkins was named CEO of the Web video hub last fall), told the paper that he has “a couple of irons in the fire,” but expects to stay in Silicon Valley.

Verizon has yet to outline its full plan for OnCue, though people familiar with it say the initial focus is to help the telco speed the development of a next-gen IP video product that can help Verizon catch up to Comcast and its cloud-fed X1 platform while also giving Verizon independent control of its set-top roadmap and the ability to trim CPE-related capex costs.

Still, some of Verizon’s OnCue-related work will include the pursuit of wireless and over-the-top options that would enable Verizon to bring more mobility to the FiOS video platform, Verizon chairman and CEO Lowell McAdam said in March at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.

Before putting the OnCue assets on the block, Intel Media had designs on attacking a saturated pay-TV market with a broadband-delivered video subscription service outfitted with “smarter bundles” that would appeal to younger, connected consumers.

Intel Media’s original plan was to launch services by the end of 2013, but those plans were scuttled amid rumors that new Intel CEO Brian Krzanich had soured on the idea.  

The reasons why Intel Media pulled back have varied. While some sources indicated that the company had trouble landing enough carriage deals and the rights to cobble together a compelling service, multiple people familiar with OnCue’s plans said Intel Media was successful in putting distribution deals place, but then refused to sign them over fears that subscriber milestones and other commitments required by those contracts proved too steep.  

Krzanich told Re/code earlier this year that Intel  lacked the scale to move ahead on a pay-TV service on its own. “When you go and play with the content guys, it’s all about volume. And we come at it with no background, no experience, no volume,” he told the publication.