Intel Now Trying to Sell its Internet TV Service

After following Intel's efforts to bring a pay TV service to the web for what seems like a few years, there's now talk that Intel Media is actually trying to sell off OnCue for $500 million. Sources said that the chip giant recently dialed back its ambitions despite opening several offices nationwide to cozy up with content creators, and is looking to secure a sale by the end of next month.

Names mentioned in the possible OnCue sale include Verizon, which already provides the FiOS fiber-optic communications network (Internet, telephone and TV bundle), Samsung Electronics and Liberty Global Ltd. The asking price would let the company recoup its development costs, but sources claim that Intel still plans to provide hardware to the new owner.

In late September, sources close to Intel Media's plans to launch a streaming TV service claimed that the company had approached Amazon and Samsung for funding and distribution. This suggested that if Intel didn't find a strategic partner soon, the set-top box project would be scrapped. Sources also claimed that Intel had still yet to lock down a single major content provider.

However, Verizon would be a likely OnCue buyer because the company could sell Intel's set-top boxes to customers currently residing outside its fiber optic FiOS network. The Big Red has reportedly been asking companies if a streaming service would require new contracts, or if the existing FiOS agreements would need to be amended to include additional streaming rights.

The last we heard, Intel Media had around 375 people working on the TV business that would be distributed through the company's own set-top boxes and the Internet. Reports surfaced in June that Intel Media was alpha-testing the product in more than 3,000 homes of Intel employees. Yet by then, the company still hadn't landed any solid deals despite offering to pay sizable premiums over traditional cable rates.

"We're being cautious. We're experts in silicon, we're experts in mobility, in driving Moore's law," said the newly-appointed CEO Brian Krzanich in a June interview. "But we are not experts in the content industry and we're being careful."

Is Intel Media dumping its TV service in defeat, or could this have been the plan all along -- to create a prototype to sell to other companies like Samsung and Verizon? The company originally planned to provide smaller bundles than what's offered via cable providers, seemingly allowing consumers to "cut the crap" that typically comes packed with cable and satellite TV subscriptions. But a number of reports over the last several months have pointed to troubles in landing streaming deals.

Obviously, Verizon would have better luck, but will the OnCue deal be worth $500 million to Verizon?