Verizon Communications’ pursuit of Intel Media’s OnCue over-the-top video platform is heating up again, and the telco could announce an acquisition as early as next week, Bloomberg reported Friday, citing unnamed sources.
Bloomberg reported last month that Intel has been asking for $500 million for those assets. Sources familiar with those talks told Multichannel News at the time that there was “zero chance that Verizon will pay that price,” and that the telco might be willing to pay a figure that is “definitely below $300 million.” While OnCue could allow Verizon to get its hands on some impressive user interface software and other intellectual property for the delivery of subscription video services over broadband lines, OnCue doesn’t bring with it value in the way of enhanced out-of-footprint distribution rights or any paying customers, the source pointed out.
Verizon and Intel declined to comment on the latest round of speculation.
There is a difference of interpretation with respect to Verizon’s near-term interest in the OnCue assets. Bloomberg said Verizon, should it be successful in securing the necessary distribution rights, intends to use OnCue to deliver its pay-TV services outside the FiOS TV footprint.
A person who is familiar with Verizon’s plans for OnCue said Verizon, at least in the near term, instead intends to use those assets to accelerate its IP video technology strategy for in-footprint services, which increasingly include TV Everywhere rights that allow FiOS TV subscribers to access live and on-demand programming in or out of the home.
Verizon is also eyeing OnCue, the source said, to ensure it has a market equivalent to X1, Comcast’s new IP-capable video platform, which features a cloud-based interface. Comcast’s coming X2 upgrade will add more personalization features and provide a common look and feel across set-tops and other IP-connected devices, including tablets, smartphones and gaming consoles.
Programmers, the source said, are also generally hesitant right now to provide out-of-footprint rights as they weigh the implications that could have on their business models, but likewise believes that such distribution rights will become more commonplace in the coming years.
“The tangible outcome of that [Verizon-Intel Media] transaction will be measured in quarters and years, not weeks and months,” the source said.
Verizon, meanwhile, has been on an acquisition binge of late that has focused on cloud-based video delivery. Earlier in the week, the company cut a deal to acquire privately held content delivery network provider EdgeCast, and, before that, acquired upLynk, a startup that gives Verizon a platform that simplifies its ability upload, encode and deliver OTT video, including authenticated TV Everywhere services and apps.
The EdgeCast and upLynk buys are to be integrated with Verizon Digital Media Services (VDMS), a business-to-business-focused unit that’s focused on cloud-based video delivery and does count FiOS TV among its clients. However, Verizon’s interest in OnCue, a source said, is more directly linked to FiOS TV rather than to VDMS.
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