Wednesday, October 30, 2013

Could Intel Media Merge with Verizon And RedBox Instant?

Unfortunate as it might be, Intel is having a difficult time getting major content companies to agree to carriage deals on its new streaming platform.  Broadcast and cable networks don't want to risk their current relationships with cable operators that already pay them substantial license fees.  Intel Media is not alone; Apple has been trying the same strategy with little or no movement either.  So with a major investment in technology and a brand new set top box, what is Intel Media to do?

Well, according to All Things D, Intel is in talks with Verizon to sell or create a partnership with its Intel Media division.   "People familiar with the talks say the two companies are in advanced negotiations."  For Verizon, Intel Media comes with a new set top box that may be seen as more desirable than FIOS' current one, offering access to both linear and streaming video content, including Verizon's partner, Redbox Instant.  And Verizon's marketing muscle could help to deploy the Intel Media service, using their "OnCue" or another new brand name, beyond the FIOS wired footprint. 

But is the Intel built set top box enough for Verizon?  It comes with no big content deals or subscribers yet, it is a pure start up.  Where is the value that Verizon thinks it can unlock?  And if it is the box, would other boxes, like the new TiVo box, which essentially does linear and streaming like Intel, as well as DVR functionality, be an easier and better fit?  Certainly questions being asked in these high level negotiations. 

As a fan of streaming platform services being created by folks like Intel Media, Amazon, Samsung, Apple, and others, the key to success continues to be strong content.  The networks are not likely to risk their current revenue model with a disruptive technology that could hurt their revenue line.  OTT success is in distributing original content and exploiting highly valued content that may become available, like potentially the NFL Direct Ticket that DirecTv currently offers.  It will be only after streaming providers become more prominent that cable networks will crave the chance to be added to their service. 

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