Cable Wars: Intel Builds a Web TV Service, Sells It to Verizon
If you build it, they will come with an acquisition offer. That, at least, is the story of Intel's web TV service, whose sale to Verizon was formally announced today during the telecom giant's quarterly earnings call.
Verizon is purchasing all of Intel Media's assets for an undisclosed sum, and plans to hire "substantially all" of the cloud-TV unit's 350 employees. The acquisition could power a Verizon internet pay-TV service that would allow it to reach customers far beyond its FiOS fiber-optic network. As of now, Verizon has only about 5 million TV customers.
In a statement, Brian Krzanich, Intel's chief executive, praised his company's cloud TV platform. "Intel Media's over-the-top TV products are truly innovative and under Verizon's ownership have the potential to change how people interact with content," he said.
But while Intel was proud to have developed some next-generation tech, it decided to leave the problem of building a customer base to others. "The critical factor in gaining efficient access to content is based on your ability to scale quickly in subscribers and end users, which is why selling these assets to Verizon makes perfect sense, with its millions of FiOS network and wireless customers," Krzanich said.
The deal also makes sense in light of other recent Verizon actions. Late last year, the company beefed up its Digital Media Services unit with the acquisition of upLynk, a startup that made it possible for ABC to livestream its programming, and Edgecast, a video content delivery network.
And with Verizon's $130 billion buyout of Vodafone's 45 percent stake in Verizon Wireless expected to close this quarter, the time may be right to integrate Verizon's TV, mobile and internet strategies. If that happens, cable giant Comcast will have some serious competition on its hands.
The Intel Media deal is expected to close early this quarter, and it's a good bet that Verizon will lose no time integrating Intel's technology with its own FiOS network. The Intel Media unit, now part of Verizon, will remain in Santa Clara, Calif. under its current management team.
Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.