Intel Sells Settop Unit to Verizon

Posted by Sam Churchill on

Intel is selling their settop box project to Verizon. Terms of the transaction were not disclosed, but according to Bloomberg, Verizon paid less than $200 million for the Internet-television startup. Earlier reports pegged the price between $200 million to $500 million, with some analysts estimating its value about $300 million.

The deal is expected to close early in the first quarter of 2014 and will be integrated with Verizon FiOS fiber-optic networks and enable “over the top” to any device.

The telecoms company will purchase assets of Intel Media, a division set up to develop “over the top” TV services“.

Lowell McAdam, chairman and CEO of Verizon, said: “The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it.”

Brian Krzanich, CEO of Intel Corporation, said: “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.”

Intel Media has been a company-within-a-company since December 2011. But the internal TV business wasn’t presented until February 2013 by Erik Huggers at Dive Into Media.

Intel’s UI replaced station numbers and schedule grids with a flowing list of networks that can be customized. Stop on a network and you’re presented not only with current and future programming, but also programs from as far back as three days ago that can be watched immediately. Similar to a cloud-based DVR.

Verizon gets a large amount of intellectual property related to Intel’s project. Around 350 people have been developing the set-top box, reports The Verge, and Verizon will offer jobs to all of them. They’ll continue to be based in Santa Clara, where Intel has its headquarters.

Intel’s plans hit a roadblock by the difficulty of obtaining content partnerships.

Computer industry players have been pushing new TV visions for 20 years, with decidedly mixed results. Content providers have strong positions, with big players like Comcast and are unwilling to undercut themselves.

Verizon’s FiOS home television and Internet service is limited by high costs and a noncompete agreement with the largest cable companies have kept it from aggressively expanding the service’s coverage area.

AT&T reported their DSL and U-verse broadband numbers total 7.7 million, with a total of 4.5 million TV customers at the end of 2012. The company said it is currently on track to reach its goal of approximately 57 million customer locations by the end of 2015.

By contrast, Verizon, added 144,000 Internet customers and 134,000 FiOS TV customers last year bringing the company to a total of 5.4 million FiOS Internet and 4.7 million FiOS video customers.

Comparing the three different delivery technologies – IPTV, cable and satellite – IPTV had just 10.9% of the total of some 85 million TV subscribers in the United States by the eight major operators.

At the end of Q412, about 48.7% were using cable, with 40.4% using satellite.

Meanwhile, Netflix says their total US subscriber count has reached 29.93 million – that’s more than HBO’s 28.7 million subs. Last year at this time Netflix had 25.1 million US customers. Internationally it has 9.19 million subs and is anticipating that it will add more than three million customers total in the next quarter.

Verizon announced their 2013 financials today. For full-year 2013, total revenues of Verizon Wireless were $81.0 billion, up 6.8 percent over 2012, and service revenues were $69.0 billion in 2013, up 8.3 percent year over year. In fourth-quarter 2013, wireless operating income margin was 29.5 percent, and segment EBITDA margin on service revenues was 47.0 percent. More than 300 million Americans now have access to LTE in over 500 markets, accounting for 99 percent of Verizon’s existing 3G coverage area.

Posted by Sam Churchill on Tuesday, January 21st, 2014 at 7:56 am .

Leave a Reply