If Apple can’t, Intel can’t

Rumors of Apple building a TV have continued for years. Sure, there’s a product called “Apple TV,” but it’s neither a TV nor a cable box. And we have Google TV. Despite the best efforts of both companies, neither product has proven really successful in terms of delivering content. In the consumer space, being able to create and build great electronics does not guarantee a winning formula, because half of the solution is having content for those devices. Because neither Apple nor Google owns much content, and certainly not premium content, their products remain niche.

Just prior to January’s CES show, Broadcast Engineering carried the story, “Intel set to destroy cable TV industry,” which highlighted Intel’s “cable-killing technology.” Said Chris Davies at SlashGear, “The new push for a slice of the living room follows Intel’s apparent frustration with the failure of first-gen Google TV boxes powered by its chips.” According to TechCrunch, Intel has grown tired of “everyone doing a half-assed Google TV, so it’s going to do it itself, and do it right.”

However, within days of those reports, Intel backed off, saying the launch announcement would be delayed to Q4. The reason for the pause? It was because “obtaining licensed content proved more difficult than expected,” reported The Wall Street Journal.

Now, some nine months later, Intel has announced it will be releasing an STB that includes live and on-demand programming. But just like Apple and Google, the chip company apparently continues to find that technology skills alone are insufficient to bring an STB + content device to market. Intel owns less content than either Apple or Google, and without content, its device is little more than a hunk of junk. Intel is learning firsthand that those who own the content, or have long-term rights to the content, are often unwilling to share the profitable pie.

In a suite near the June NCTA convention, Intel said it plans to compete with Apple, Amazon and Google with its own STB and a line-up of live and on-demand programming. To support that service, Intel was reported to be offering as much as 75 percent more that traditional cable rates for some programming.

But a recent New York Times article discussed the rumored practices of some existing distributors, who appear only too willing to punish wannabe players. Writing in his blog post, Richard Greenfield, an analyst at BTIG Research, said that one unnamed distributor had prevented a channel owner from selling to a service like Intel. The legality of such moves are questionable. “It most certainly is bad for consumers, as it limits competition and prevents the emergence of distributors who can provide revolutionary new ways of experiencing TV,” Greenfield said.

Said the Times article, “Mr. Greenfield did not name any names, but several channel owners and smaller distributors said Time Warner Cable, the nation’s second-largest cable company after Comcast, has been by far the most aggressive in its dealings with channels.”

Responding, Glenn Britt, CEO of Time Warner said, “We may well have ones [contracts] that have that prohibition; this is not a cookie-cutter kind of business.”

The Justice Department appears to have taken note of such comments and may be investigating whether the media conglomerates are violating antitrust laws by refusing to fairly negotiate with new Internet video service providers.
But do the big cable companies and content owners have anything to fear from a Justice Department that is currently neck deep in trouble with its bungling of the Fast and Furious, IRS and AP scandals? Given the department’s track record, my bet is that the congloms have nothing to fear.

Brad Dick, editorial director