Intel Should Forget Pay TV, Build a Pay OTT Network

Google, Apple, Oracle, Microsoft Might Join

– Start Building a Broadband Network Too

Intel Media has scuttled its plans to have a camera with facial detection features from its upcoming pay TV service, according to the Wall Street Journal. It’s reportedly developing a cloud-based DVR that will offer every show that airs for two or three weeks. The question is why Intel, or Apple or Google, wants to be just another pay TV service? Most US consumers already have four from which to pick — telco, cableco and two satcos. All the wannabes can do is offer a few hardware gimmicks that the existing pay TV services can also offer and deliver it over the pay TV services’ broadband network that will never have the guaranteed quality of service the pay TV services have for delivering their own pay TV.

You can’t beat the pay TV networks that have spent several decades polishing their wares with more of the “same old, same old” but with a slightly differentiated twist or two. Mucking around with face detection cameras and cloud-based DVRs is majoring in minors. Besides the pay TV services can offer those whenever they want, so if they become hot buttons for Intel they will just add them.

Content is the only real differentiator and duplicating what the pay TV services already have, which is not even possible, won’t get the job done. Instead of joining the crowd, strike at them where they are weakest — OTT. Pay TV services are never going to offer Netflix because it’s a direct competitor — when their subscribers watch Netflix they are not watching the ads on their pay TV channels. The pay TV services are never going to offer Vudu or Cinema Now because they want to sell and rent movies themselves. Hulu is a different kettle of fish because three of the pay TV crowd own it — Comcast, Disney and 20th Century Fox.

Intel should develop a killer OTT network that will compete directly against the pay TV services by offering what they do not. Their goal should be “every movie, every TV show ever made,” but they don’t have to wait to start until they can fully deliver on that promise. Start with as much as they can get but be aware that the pay TV services are reportedly paying the studios to keep the “good stuff” away from the OTT outfits.

For beginners they should make deals with as many OTT services such as Netflix, YouTube, Yahoo, Vudu and AOL as they can — maybe even have a go at Apple for iTunes. Then they should subsidize existing or startup OTT services that will deliver live sports, news and reality shows. Start small with stuff like talk shows, table tennis or badminton and build up from there just as the sports powerhouse ESPN did. Work with Bloomberg, the Financial Times or Yahoo to develop a couple of live business channels into “must see” for Wall Streeters and millions of smaller investors.

Sony might want to partner in with its underestimated and under-promoted Crackle service.

Intel might be amazed at how quickly it and its partners find quality content providers that feel they have been slighted by the pay TV services. Look at how well Netflix has done with original content, some of it so good it’s been nominated for Emmys. Besides, the studios will sell to whoever is willing to pay — they just want to give first choice to their current cash cows, the pay TV services, but that is changing as the OTT network becomes successful by drawing millions of pairs of eyeballs every night. They long ago made the move from theaters to pay TV.

The pay TV services are never going to provide a competitor like Intel the same QoS they give their own pay TV services, so in time Intel, perhaps with others such as Google, Apple, Microsoft and/or Oracle should start building a third broadband network. The first big decision is whether to build a wireline or a wireless one. Google with Google Fiber has already started down the wireline road. Google and Intel once thought wireless was the way to go and invested in Clearwire, which could not get WiMAX deployed before the established cellcos ruined Clearwire’s party with LTE

It might be worth talking with Verizon, which is …

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