Intel: A Virtual MSO?

In a departure for the chip giant, Intel
is planning to become a “virtual cable operator,”
with a service that would offer consumers a bundle
of TV channels delivered over the Internet, The
Wall Street Journal reported last week.

Intel has engaged in
discussions with media
companies on the service,
which could launch
before the end of 2012,
according to the Journal,
citing unidentified “people
familiar with the effort.”
Intel declined to comment on the report.

Industry observers were doubtful that Intel —
or any new entrant — could assemble an over-thetop
service rivaling cable or satellite TV services.

“If the intention is to launch a service that replaces
cable service, the business model doesn’t
work,” Shahid Khan, a consultant and chairman
of MediaMorph, said.

Besides the fact that premium content such as
live sports is locked up by pay TV providers, Khan
noted, “to get additional first-run content rights
and/or cable-network affiliate deals, the new virtual
MSO will need to spend a lot of money, and
the economics will not make sense, since they’ll
need to keep the subscription fees lower than cable.”

Still, the potential entry of Intel — with its bankroll
of $5.1 billion in cash on hand — into overthe-
top video would add another alternative to
traditional pay TV services. Consumers face a
growing number of options for receiving video
content over broadband from Netflix, Apple, and others.

Developing its own set-top box to deliver the Internet-
video service, and branding the service with
its own name are “in at least some scenarios under
consideration” by Intel, the Journal reported.

The chip company has even requested “rate
cards” for particular channels and on-demand
programming, although it does not yet appear to
have struck programming deals, according to the

Intel previously had been a key partner for
Google’s TV initiative, producing high-performance
microprocessors that powered the Google
TV software platform. But last year, after Google
TV failed to get broad traction, Intel phased out
that effort.