Is this the beginning of the end of your typical cable subscription?
Bloomberg reports that Intel is getting close to making a firm deal with Time Warner, NBC Universal and Viacom in obtaining programming for its online pay-TV service. These three media companies have reportedly agreed to broad outlines of the proposed service, although some aspects still need to be settled. Intel is also still trying to negotiate the financial terms.
Unnamed sources close to the negotiations claim that Intel is getting ready to begin financial negotiations with News Corp., owner of the FOX film and news businesses. The chip maker has also entered preliminary talks with Walt Disney Co. (ABC, DIS, etc) and CBS Corp. (CBS).
Erik Huggers, Intel’s vice president for media, said last month that Intel plans to offer an online product this year using its own set-top box. This service will compete directly with "incumbent" operators like Comcast, Time Warner Cable, DirecTV, Dish Network and others while still using the customer's current broadband access.
By taking this already established route into the living room, Intel believes it can offer more choices over the channels consumers receive, combining live channels, on-demand programming and cloud-based DVR capabilities. The set-top box promises an easier-to-use electronic programming guide, offering better content discovery than your typical cable subscription set-top box. However customers will also be able to receive programming on their PCs, laptops and mobile devices.
Unfortunately, subscribers to Intel's upcoming TV service may be forced to pay more than what they currently do to cable companies. That's because Intel will be required to shell out premium licensing fees to content owners because it's "the new kid on the block." David Bank, an analyst at RBC Capital in New York, thinks this will be great for the likes of NBC Universal and CBS Corp. who are already cautious about stepping out of the long-standing relationships with cable operators.
With Intel, Google, Microsoft and even Apple looking to enter the TV programming market, consumers will be faced with even more choices than before. As it stands now, thanks to services like Netflix and Hulu Plus, Time Warner, Comcast and other cable TV providers have launched online programming that allows customers to log in and watch specific channels on their tablets, smartphones, and computers.
But eventually these cable providers may be forced to bring all of their programming online to battle the new web-based competitors. Suffering a declining subscription rate, they may be forced to provide competitive packaging that doesn't force customers into subscribing to dozens upon dozens on channels they'll never watch. As it stands now, many set-top boxes are already IP-based – it's the content owners who are seemingly dictating the rules.
Intel's move into the online TV space is reportedly fueled by the company's need to be less dependent on the personal computer market. Industry players across the board are feeling the decline, and are scrambling to find different avenues to make up for the loss in revenue.