The Backstory: Why Get into the TV Business?

 
Erik presented his plans and got funding from mother Intel on December 8, 2011. In less than 12 months the Intel Media team had built all of the pieces of the puzzle. They'd built the streaming device, the OS, the web services infrastructure, the video infrastructure, everything. Erik told me that he'd never seen an organization move that fast in his career. To the objective outsider, this either means that Intel is putting a ton of support (think: cash) behind this project, or it's going to be half baked. Based on some of my own snooping, I don't think it's the latter. Which then begs the question, why was Intel so eager to go off and build an IPTV service and do all of this work? And why did it have to happen so quickly?
 
I didn't ask Erik the first question, although I think the answer is obvious. Intel's present success is very closely tied to the PC industry. It's trying to break into the established ARM smartphone and tablet industries to help go where the industry goes, but it does so as a late comer and is currently enjoying all of the struggles associated with that. The TV industry however hasn't really been revolutionized, and it's ripe for change.


The Boxee Box, one of many Intel powered solutions for the TV

We've seen high profile attempts to empower the big screen with devices like the Apple TV or Google TV. Smaller players have made similar attempts (e.g. Boxee Box, Roku). All of these boxes attempt to stream existing cloud based content to your TV, but they don't fundamentally replace a cable TV subscription. For some users, the content you can currently get on any one of these platforms is good enough to augment a cable TV subscription, while for others it's good enough to cut the cord entirely. For cord cutters, the gaps in content that remain are filled by content owner websites (e.g. southparkstudios.com) or through piracy. None of the existing platforms offer a universal solution for live TV either, you sort of have to hope that whoever is broadcasting whatever you want to watch in real time is kind enough to stream it - or you have to wait and watch it later.
 
The TV market today looks a lot like the smartphone market did not too long ago. There are established players, but no one is really doing it perfectly. There are good ideas, but no platform that unifies them all. Intel is interested in the TV market because it is a consumer facing business that's detached from the PC industry, and one that's ready for a revolution. Getting in early and generating revenue that's detached from PCs would help Intel grow its revenue base, diversify a bit and likely keep investors quite happy. The side benefits are obvious. Any solution here would need a fairly heavy cloud platform to drive it (you have to store, transcode and stream all of that content), plus if you really do pull off a good internet based TV strategy it simply drives usage of all other computing devices as you'd want to be able to stream/consume content on as many different screens as possible.
 
The "why do it?" question is an easy one to answer, but figuring out whether or not Intel can do it is a different one entirely. Intel certainly has the cash to pull off a dramatic play in the TV space. It also has the ability to customize silicon to put fears to rest of its TV solution being a giant pirate box. However, Intel hasn't traditionally done well in the consumer facing software/services department. 
 
Intel does a great job of building fast silicon, validating it and optimizing software for it, but when was the last time you saw Intel build a gorgeous UI? Even Intel's reference Ultrabooks don't really ooze confidence that the company knows how to build a real consumer device, software, service or experience. The skepticism here is understandable and warranted.
 
The only solace Intel can offer to the skeptics is the fact that Intel Media is staffed by a combination of Intel insiders as well as from others outside of the company. Erik naturally stressed hiring from Google, Apple and Netflix. Erik himself came from the BBC and admittedly isn't much of a chip-head to begin with. The proof will be in the pudding. Intel hasn't publicly demonstrated anything, it hasn't announced pricing or a channel lineup. With a product launch sometime in 2013, we won't have to wait long to see how this plays out.
What is it? What I'd Like to See
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  • Hubb1e - Thursday, February 14, 2013 - link

    Here's what I would like:

    Subscription services:
    ability to pick the individual channels I want to subscribe to with a high capacity DVR
    This would allow me to watch and record the shows that I am most interested in. I could get news live, I could watch stations like History or Food or the Kid's stations and not get ones I'm completely uninterested in like BET. I shouldn't be paying over $1200 a year for HDTV. That's ridiculous. $5 a channel would be fine with the local channels free. I see no reason to abandon the live TV with DVR model since it is easy on bandwidth but the current status quo of almost $100 a month for HD TV service is ridiculous.

    Then I want to augment this with a service like Netflix that serves up older content for a subscription. I can catch up on shows, watch older movies, etc.

    Pay per view
    Be able to pay $1 an hour to stream any TV show I want, live or archived. I can use this to watch shows on channels I may not have a subscription to. I can also use this to watch shows that I forgot to DVR but I won't pay $1 an hour to stream old content. I don't think I see any value in that. Netflix has kinda ruined that market with it's cheap subscription service.

    I'll also pay $1 -$3 to stream a recent movie. I do this now from Vudu but it doesn't make that much sense when Redbox is down the street and I can get that movie for $1. I also think that the current pricing system Vudu has for movie rentals doesn't make any sense. There should be a range of prices from $1 for C list movies to $3-4 for A list movies. This can also depend on how recently the movie was launched. Right now all movies on Vudu are far too expensive and cost the same regardless of how good they are. The movies should be priced according to their quality.

    And all this should be available on the same box. I shouldn't have to switch from my DVR to my BD player to my TV to find services that I want. I liked the idea of GoogleTV's unified search where you could search for your content and it offered you different services that had the same stuff. But I also want to be able to browse through my DVR and if there's a show I forgot to record or a similar show on another channel I don't get it could recomend that I stream that show for a price. I've got no problem with upselling if the service is seamless and user friendly.
    Reply
  • chucky2 - Thursday, February 14, 2013 - link

    I know you said Intel isn't ready to talk about this yet, but, when the time comes, it'd be nice if Intel could comment on what kind of resolution support they'll be able to provide?

    1080p and lessor resolutions, obviously. But what about 4K? Or support for 8K? Or at least commit to supporting 8K via firmware update. Would be interesting to see if they're going to save bandwidth by having their new product take advantage of the new HEVC (aka H.265) codec, and regardless of that decision, what bitrates will the be offering.

    Intel could really come out ahead here and offer a solution that is able to integrate with Windows Vista/7/8/MacOS/Linux computers on the network and provide for streaming content on the multiple TV's in the house with content on the network, including allowing me to push via iPad or phone (iPhone, Android, Windows Phone all supported. Streaming from a NAS, also needs to be supported.

    I'm in for a couple of these if they can do it right and bring the high end quality that is lacking - and, with Intel's resources, that should be beyond easy as many devices already are coming close to this now.

    Chuck
    Reply
  • jjj - Thursday, February 14, 2013 - link

    You keep calling it a revolution but a revolution is much more than video. The industry is dysfunctional because regulators and legislators fail at their jobs and that is unlikely to change anytime soon.The internet infrastructure is also far behind what is needed but all this doesn't matter a revolution has to be much more. The TV itself is in danger of going extinct if there isn't a lot more done .A lot of TVs just sit there . Then again maybe when you say revolutionize the TV you aren't talking about TV but media delivery and that's another conversation.
    Anyway , Intel gets a new CEO soon so we might never see this service ,it's just not something that is worth it for Intel in the long run.
    Reply
  • Termie - Thursday, February 14, 2013 - link

    Anand,

    I appreciate your thoughts on this, and I do think that most of us would be on board with such a service, but I don't think we'll be seeing such an offering any time soon.

    I've had cable for six months over the past 15 years. I tried out Comcast HD in 2006 and then found I could get a better picture for free using an HD antenna. I just recently got a Comcast SD box because they forced me to take it to get the Blast cable internet service at a discount (50mbps). I plugged it in once to get it running, and then promptly unplugged it. I hate the idea of wasting 15w standby power for something that offers me the utility of a small electric heater. So I like your a la carte streaming idea.

    Here's the catch - a la carte just isn't going to work. The model that cable operators have used for a long time is to bundle a few high-quality channels that we'd all likely spend $5/month on (or maybe $35-40/month total), plus hundreds of other low-quality channels that a handful of people around the country might pay $5/month for, and then packaging it all into a $80-100/month bundle. There's money in that.

    There are simply too many channels currently for a majority of them to survive if we went with a la carte. The revolution that we need, unfortunately, is not on the hardware side, and that is why Intel will likely fail. It is on the programming side - we need to admit that we as a nation have become addicted to quantity over quality, and cut the lifeline to about 90% of the cable channels out there.

    And the only way that's going to happen is if people stop paying for cable TV and the cable operators start dropping content providers to lower costs. As long as companies like Comcast are making money hand over fist (and their purchase yesterday of the remaining assets of NBC Universal suggests they are), nothing is going to change.

    - Termie
    Reply
  • Jaybus - Monday, February 18, 2013 - link

    The fact of the matter is that those channels should die if nobody wants to pay for them, yes? They are being kept alive by strategic bundling because the cable companies own much of this content. The question is will Intel be able to get a decent licensing deal for say Disney when Comcast owns controlling interest in Disney? Will they be able to get the content people want without being forced into also taking tag along baggage channels? Reply
  • pm - Thursday, February 14, 2013 - link

    I work for Intel, so I'm not going to comment about Intel's TV plans because I actually have no clue what my company is actually planning and I'll wait and see.

    But I can comment on me, and my comment is that I'm a lot like Anand. I cut the cord years ago - we've never had satellite and cable TV is just too expensive given how rarely we were using it. The monthly cost for basic cable locally is $50/month - $600/year is a lot of money to me. We have an over-the-air antenna, and I have a computer that I use as a DVR and for watching shows. We watch Colbert Report and The Daily Show pretty much nightly using their respective websites (or Hulu), and then I record over-the-air shows, and we watch the occassional PBS show like Downton Abbey and Nova (my wife is devoutly loyal to Downton Abbey.. and I watch it too). We get movies from Redbox at $1/each or, if I'm lazy, I'll buy a digital version on Amazon or iTunes.

    What I would really like is a system that is less kludgy than what I have now and I'm willing to pay more than I am right now for it. Right now I pay nothing to anyone except Redbox. I have Windows Media Center as a DVR, and that works ok with a remote, but then I have to get a keyboard (or mouse) out to get to Hulu, or PBS or wherever on the net. I have them bookmarked so it works ok. But it's all a hassle to change shows, the selection is pretty small overall (no Weeds, Breaking Bad, Game of Thrones or any other premier shows for us).

    I am willing to pay something - like $20/month - but I want something that is better than what I am doing now. I have no idea if Intel can do that or not, or Apple, or any of the other companies that are rumored to be moving into this space. What I do know is that I'm looking forward to seeing what is coming because I'm not super thrilled with the system that I have working right now.
    Reply
  • rohitp - Thursday, February 14, 2013 - link

    "a service that contains the set of "everything I care about". Although I like basketball, I don't follow it religiously. I need the major networks, Comedy Central, perhaps the Food Network and one or two more. I need a smaller, targeted bundle."

    That is exactly what I want. The free to air channels with a couple or so more from the cable side as far as live TV goes. For other needs, as you mentioned, Netflix/Hulu/Amazon/Vudu works fine.

    I tried doing the online thing, but if it is not on TV then connecting the pc to the TV acts as an impediment to just pick up the remote and watch something.
    Reply
  • cserwin - Thursday, February 14, 2013 - link

    ESPN is the crux to the puzzle in the U.S. As soon as you can subscribe to ESPN, millions will cut the cord.

    I find for the $50 I was paying for Dish Netowrk, I can have Netflix and more Ituenes content than I can possibly watch.

    But I can't get ESPN.

    I like to get my content through legitimate channels. Hard to tell my kid about torrent streaming for live sports. Hope ESPN figures out a legitimate way for me to give them my money without having to subsidize an antique business model of content distribution.
    Reply
  • bdunosk - Thursday, February 14, 2013 - link

    What about Amazon Prime? It looks like most of the things I'd want off Netflix are available with Prime and I have the option to pay for a season of a show I like. Yeah, I can't watch that episode until after it airs... but I rarely catch a show when it's supposed to air and only care to watch a couple of shows. Reply
  • mrnuxi - Thursday, February 14, 2013 - link

    Disclaimer: I am a Netflix subscriber, but for DVD/BluRay only (i.e., no streaming).

    I would describe myself as near-audiophile/videophile. I have a really good sound system (with dual high quality subwoofers), a very good Oppo blu ray player, a Squeezebox Touch. I also still get DirecTV, though I really only use it for watching [Tivo'd] sports. When I listen to music I will never listen to lossy MP3s -- all my CDs are ripped to flac that can be streamed (via SB Touch [hacked at that] to my stereo system]. When it comes to movies, I watch preferably Blu Ray or else DVD, never streamed content from Netflix because I value the high quality. Perhaps you think me a snob, but I'm definitely not a golden ears/eyes.

    When streamed video content has the same quality (both video and audio) as the Blu Ray it came from I will be all for it. Until then, Intel would not have me for a customer.

    Now, I doubt I am a typical potential customer. If all their customers were like me, Apple would have gone belly up with iTunes, iPods etc catering to the MP3 crowd. It's funny -- for portable listening to music I use this inexpensive but vastly better than iPod combo:
    1. Sandisk Clip+ running RockBox software (with a 32gb mSDHC card containg flac-encoded files)
    2. FiiO E6 headphone amplifier (awesome for under $30)
    3. Various decent but not super-expensive headphones.

    Wonder how many of you Anandtech readers are like me ....
    Reply

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