Anand's Thoughts on Intel's TV Initiativeby Anand Lal Shimpi on February 14, 2013 4:21 PM EST
Earlier this week Intel announced what we'd heard rumors of in months past, that it would be creating an IPTV service along with a custom software and hardware platform to deliver it direct to consumers. A few hours after the announcement, I had the opportunity to speak with Erik Huggers, formerly of the BBC and currently heading up Intel's new Media division.
For years Intel has tried to grab a slice of the TV business. Remember the Intel CE series of Atom based SoCs? How about Sandy Bridge's Intel Insider technology? Both of these were focused attempts to solve problems within the TV industry, but both ultimately went no where. Intel's solutions thus far have been too narrow in scope to do anything.
The TV today reminds me a lot of smartphones in the early 2000s. There's tons of potential, but largely ruined by slow hardware, kludgy user interfaces and heavy fragmentation both on the content side and on the cross platform compatibility side. Much like the smartphone, the solution to revolutionizing the TV as a platform is unlikely to come from within the existing market. And just like the smartphone revolution, a disruptive solution here may very well come from a computing company.
What Is It?
At a high level Intel's unnamed TV play seems to work like this. Intel negotiates deals with content providers, said content lives on a server farm somewhere (likely running tons of Xeons courtesy of mother Intel). Using a box that Intel will sell you, you'll get access to this content over the Internet. The box will run an OS and software layer both developed by Intel. The content will include live TV, traditionally only available via a cable TV subscription. The box Intel will sell you won't act as a traditional PVR/DVR, instead you'll be able to activate a catch-up feature to pull down older episodes after they air, as well as live TV. How far back you'll be able to catch up will depend on the content license, it's technically feasible to go back as far as you'd like - but not all content owners will allow it. Intel's service will also include video on demand features to fill this gap. The goal is to provide one platform where you can get access to everything: live TV, episodes/content that have already aired, and even older content through VoD.
The content will be bundled together in some form. This isn't a purely á la carte TV service, but rather bundles put together by Intel Media rather than your cable company. Think cable channel/network bundling, but perhaps more granular than you're used to. Simply offering the same bundles at the same price as your cable company won't work, so I suspect the bundles will have to be more user friendly (more sensible, smaller, etc…).
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Intel doesn't seem to have any intentions of keeping the content exclusive to this one box either. Erik wants to see this content on Ultrabooks, smartphones and tablets as well as on your TV. It sounds a lot like the holy grail of digital convergence: any content, on any device, anywhere. Netflix was really one of the first to achieve this level of ubiquity, but only really for older content. Intel seems to want to do this with live TV.
Intel isn't talking about bitrates or codecs yet, nor is it disclosing what content providers have already signed up for the service. The platform will launch this year and it'll be immediately apparent whether or not Intel is on the right track after that happens.
Pricing is also unknown at this point. Erik was careful not to brand Intel's TV service as a value play, implying that you may not actually save any money vs. your current cable provider. It's pretty obvious from the start though that Intel can't just offer a better experience than your cable TV provider, it also has to offer a cost competitive platform as well.
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Sprigjr - Thursday, February 14, 2013 - linkI love anandtech.
artvscommerce - Thursday, February 14, 2013 - linkI often have that same thought. Just make sure you don't say that in ATOT! It never ends well..
spazmedia - Thursday, February 14, 2013 - linkAnand,
Intel will undoubtedly build an amazing product to access content. However the BIG problem, and I mean big, is getting the license to distribute the content. All the content producers (studios) need to be on board. This is not a trivial task and armies of lawyers will be involved. Intel can spend all they want but they have absolutely no presence, from a negotiation perspective, in the entertainment business. In fact if they were serious about this project they would have sought out partners. What complicates matters further is that these same studios also own cable networks. They have no interest in divesting of those interests.
Khato - Thursday, February 14, 2013 - linkOne interesting perspective to take on this though is that Intel has a chance at negotiating purely because they aren't in the entertainment business. As you correctly point out, when the content owners also have a stake in the cable networks there's no reason for them to license content for any less than what they get from the cable networks as a whole... which basically requires the cost to the consumer to be higher in order for the third party to make a profit.
Intel potentially has an interesting play here in that they don't need to make money on the content. Initially at least I'd imagine they'd be fine with just making money on the hardware and having the content portion be at cost... and in that case the sales pitch to the content owners would be the advertisements aspect. If the content owners could actually be making more money through Intel's IPTV due to greater ad revenue than they do through with the current system... well, why exactly wouldn't they give it a try to see if it pans out?
mrdude - Thursday, February 14, 2013 - linkad revenue is only one aspect, and it's actually not favorable for them. Ads online aren't greeted with the same obliviousness. People are well aware of ads online and hate them with a passion. If the ads are done the same way they are on television - which would essentially be the same exact viewing experience as watching it over the air - then where's the benefit?
I don't see this going anywhere unless the big content providers are able to make a significant profit. Breaking up the stranglehold on content, packaging and service, is a move in the opposite direction, though. Unless the providers are making the same amount of money, or more, per-customer, they won't bother. But unless this is significantly cheaper than cable or satellite subscription, viewers won't care.
ricardoduarte - Thursday, February 14, 2013 - linkI honestly think that this might work, like anand pointed out correctly intel needs a backup strategy from the sinking PC business, and they are (in my opinion) the best company to change it all. Imagine how this model would simplify infrastructures for cable operators ( i dont know about US but in EU usually they provide internet and tv tied in their infrastructure).
This approach would allow them to reduce infrastructure costs greatly, while keeping costumers attached to it, the way i see it, if a cable operator is to adopt this, they would use it as an excuse to replace tivo (i use virgin in uk) or recording boxes, and charge a premium on top while things on their side a being upgraded to eventually do a full switch.
If you think about this cable operators would only have to worry about delivering the content, and internet connection service, which would reduce their costs greatly (if intel isn't too greedy).
The only thing that makes me wonder is if cable operators will be happy to depend of intel, because by using this model intel could in theory dictate the price of cable and annoy a lot people.
If intel are clever enough they only build the sdks for the cable boxes and leave the UI's to be done by content providers so they can create a branding illusion.
mrdude - Thursday, February 14, 2013 - link"If you think about this cable operators would only have to worry about delivering the content, and internet connection service..."
While bandwidth and connectivity may be great in the UK, there are many people in the US who live in rural areas. As a result, the infrastructure costs wouldn't actually be decreased but potentially increased as they'd have to add a much bigger web presence, consider the issue of hosting, servers, etc. These are all things they already have, but having millions of people demanding 24/7 uptime and fast speeds is another story entirely.
Furthermore, there just aren't many people who have cut the cord. The content providers are making money hand over fist and data caps are still the norm. Neither of those looks like it's going to change anytime soon.
This model would work if there was an untapped market so big that it would allow for these companies and providers to deviate from their current pricing schemes and content delivery systems. There isn't, though. And without an incentive ($$$), it just won't happen.
I understand Intel needs to diversify given the threat from below, but this just doesn't look like it's the right direction nor the right time.
new-paradigm - Thursday, February 14, 2013 - linkWe have the same problem in the UK. Connection out in the sticks is not always great... although broadband over phone is at least usually able to give a couple of megs download speed.
ricardoduarte - Thursday, February 14, 2013 - linkWe have the same problem in uk with data connection.
With the right video compression algorithms such as HEVC (http://en.wikipedia.org/wiki/High_Efficiency_Video... efficient caching and the right software bandwith usage would be greatly reduced.
If this method would be in place providers could focus more in offering more bandwith than maintaining sattelites, and expensive cable services, and all the other infrastructure that runs along internet cables.
I am not saying that this will happen overnight, but that this has a much higher chance than rokus, googleTVs, appleTV, its for sure.
Because if intel does it properly there are true economical benefits to this strategy, which is the main cause to why nothing has being done with TV yet, because the current model works and is finantially viable. If intel manages to prove that this one is much better, operators will change.
Khato - Thursday, February 14, 2013 - linkWhat manner of online ads are you talking about though? The absolutely pathetic ads that you get with most all of the free streaming services? Those are indeed a joke and just go to show how much those content providers need an actual solution. (Who's to say that there wouldn't be a free subset of programming equal to what content providers currently offer but using this superior user experience/infrastructure Intel is supposedly putting in, of course that'd just be streaming to a browser/app not the dedicated hardware.)
But no, the key advantage here with advertisements would be that they could be the same as what's normally on tv, but targeted to a specific set of parameters. aka, the hardware processes the images from the camera to see who's watching (note that I'd be extremely surprised if there was any possibility of it transmitting images, just the parameters it can gather from them.) It could technically even pause the show (and the commercials!) when the viewer gets up and moves out of view. A commercial that you know a targeted audience is watching is definitely worth something more than the system as it is today.
And the real thing to keep in mind is that this is simply the way to get their foot in the door. Once the media conglomerates see the advantages of this model there's a lot more than can be done. Eventually might even be able to get rid of the commercials if willing to pay a bit more.