Intel Cooks Up Future of TV -- a Potential Mess for Cable

Illustration by Athletics Visualize the TV service you've always wanted: a gorgeous interface that does away with clunky (and often ad-strewn) programming grids; a simple remote that isn't a crushing array of buttons; a cloud-based DVR that doesn't require you to hit "record"; algorithms that learn what you like and recommend new shows; an easy sync with social networks; effortless co-viewing with friends far away; video on tablets, phones and other devices with screens; and the seamless integration of traditional TV and what's on the web. Now imagine all of that comes in a beautiful box with a front-facing camera and the kind of industrial design that makes you not want to hide it in a cabinet. This device is built. And it is in the hands of a select few secret testers at media companies, agencies and, of course, Intel's Santa Clara, Calif., headquarters. About a year ago, Intel established Intel Media to build an "over-the-top" TV service, joining streaming-video players such as Netflix and Hulu. Its service, however, will be the first to deliver a full array of cable TV channels over the internet. Intel has not announced a name, a price or a release schedule more specific than some time this year, but those who have seen it describe it as a significant advance over any existing cable or satellite platform. "I'm impressed because Intel makes chips; no one expected them to come out with a product like this," said Michael Bologna, head of advanced TV at Group M, who has spent several hours with the box. Silicon Valley has the best interface designers in the world, but until now efforts to apply that expertise to TV have led to false starts like Google TV and products that don't go near far enough, such as Apple TV and Xbox Live. The difference between this and all previous efforts to reinvent cable TV is that Intel has taken the time and spent the money to become a cable operator itself. As CEO Erik Huggers told attendees at the All Things D media conference in February, this isn't a service for cord-cutters or anyone who wants a cut-rate cable package. Rather, it's a better cable experience that is designed for (and will be marketed to) the kind of young, affluent and connected consumer who would like a TV service that works as well as their tablet or iPhone. Among the many executives Mr. Huggers has hired to build Intel TV is Courtnee Westendorf, a longtime Apple marketing exec who worked on the launches of the iPod and iPhone over the past decade. She is planning a national TV campaign that will not resemble the traditional work from local cable providers. "If I asked you about your favorite TV or film, whatever it is there is a flash of an emotion. That is what I want to deliver in the marketing," she said. There will be a new brand, but also a connection to Intel, which is an ingredient brand to consumers -- the "Intel Inside" on a host of PCs, laptops and other devices. No one expects Intel to become a TV power overnight. But it represents an interesting challenge for cable and telcos, which as of now do not offer TV service outside their own wired footprint. Each new customer who opts for Intel TV is a customer dumping part of the "bundle" of services that cable and telcos like to sell, including broadband, TV and sometimes phone. Defecting subscribers will be relegating their cable and telco providers to "dumb pipe" status, selling connectivity and bandwidth but not services on top. So, how will cable respond? Limiting bandwidth to make internet video services more expensive would draw the ire of the feds. So it's more likely that the cable industry will just follow Intel's lead. Tom Morgan, CEO of Net2TV, one of many startups building web-based video services, believes Intel will open the floodgates and that cable and satellite providers will, too, take their services "over the top" -- meaning you'd be able to get DirecTV, Comcast's Xfinity, Verizon's FiOS or AT&T's U-verse regardless of your broadband provider. It may not happen this year, but soon enough, "each will go outside their network and go national," Mr. Morgan predicted. And that will lead to a world that the pay-TV-industry consumers have always wanted: one with true competition.

Intel Cooks Up Future of TV -- a Potential Mess for Cable

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