November 27, 2013
Intel Seeking To Unload Failing OnCue Brand For $500M
Alan McStravick for redOrbit.com - Your Universe Online
Intel, the tech company famous for its Pentium chips, thought for a time it wanted to try its hand in the entertainment-on-demand market. Earlier this year, with patents and trademarks having been taken out for their OnCue brand, it seemed Intel was poised to be a major player in this new field. But then it all went wrong.
Even at the time of its official launch in February, OnCue was a struggling project that never really found its footing. It was in May of this year, when Intel’s new CEO Brian M. Krzanich took the helm of the company, OnCue began receiving the final nails in its coffin. Krzanich, according to sources speaking to Reuters, believed Intel could ill afford the “distraction and expense” of the project.
Adding to that sentiment, Intel chairman Andy Bryant told investors how he was “personally embarrassed” by the OnCue debacle. It, he claimed, showed Intel had lost its way and was not ready for shifting consumer patterns. He was referring to the flight from desktop and notebook computers to the tablet and smartphone markets. Bryant claimed Intel is “paying the price” for missing this emerging trend.
In the form of a corporate mea culpa to its investors and to Wall Street, Intel has pledged to quadruple the number of tablets carrying the Intel chip in the next year.
But the company also can’t afford to just wash its hands of OnCue and simply walk away. This is why the tech world has been abuzz for the past 24 hours with word Intel is seeking a suitor willing to pay an estimated $500 million for the OnCue infrastructure while allowing Intel to secure future chip provision for the service. Intel hopes to have a deal inked by the end of the year with one of the potential reported suitors, like Verizon, Amazon, Samsung or Liberty Global.
Adding to that speculation, other anonymous sources claim Verizon is currently in discussion with executives representing both broadcast and cable channels. This discussion, they say, is so Verizon can clarify current contracts with providers and determine whether or not those terms would preclude them from venturing into a streaming television service like OnCue.
Verizon may be luckier than Intel in these discussions. Reports claim Intel failed among content owners in getting them to break up the industry standard channel bundles now offered. Ultimately, this led to the company scuttling the endeavor. And content owners balked at Intel, despite it offering a 75 percent premium over and above what competitors pay to carry content on their provider networks.
While Verizon already offers its FiOS service, OnCue, should Verizon stake its claim, would operate beyond FiOS and its current capabilities. Ultimately, Verizon will need to know whether or not its current content licensing agreements cover a potential OnCue service under the Verizon name, or if content providers would demand a renegotiation.
If Verizon feels it has received the go-ahead from the broadcast and cable networks, then $500M would be an amazingly good deal for the company. Verizon would take over after Intel had already laid a significant portion of the groundwork with its completed server-side distribution system, set-top boxes and initial support for an OnCue mobile app, as well.
However, if Verizon wants to re-implement the camera-based viewer tracking Intel hoped would revolutionize the field of targeted advertising, it is going to have to start back down that road on its own. Intel, after situational failures and negative survey reactions, pulled the plug on the technology meant to monitor broad demographics, like age and gender, in an effort to offer specifically targeted advertising and promotions.
While Verizon certainly seems to be taking this potential acquisition most seriously, other suitors are out there, and with Intel’s desire to have the deal sealed by New Year’s Eve, we are certain there will be more to report on this story in the coming weeks.