Intel gives up on TV set-top box effort, sells offshoot to Verizon

(MCT) – Intel Corp.'s effort to battle TiVo and other Silicon Valley companies for control of American living rooms ended Tuesday, when the chipmaker announced it is selling a division sprouted to develop a set-top box for televisions to cable operator Verizon.
Jan 22, 2014

(MCT) – Intel Corp.'s effort to battle TiVo and other Silicon Valley companies for control of American living rooms ended Tuesday, when the chipmaker announced it is selling a division sprouted to develop a set-top box for televisions to cable operator Verizon.

The companies did not announce an acquisition price for Intel Media, though Bloomberg News reported that Verizon paid less than $200 million, based on two anonymous sources. The division launched in 2011 to focus on offering an a-la-carte option for television content, with live shows and previously shown content easily accessible through one, Internet-based component. After reportedly striking out in efforts to line up deals with content providers, however, Intel will turn the project over to a traditional cable company that already has those connections.

"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 CEO Brian Krzanich said in Tuesday's announcement.

Reports about the service, eventually dubbed OnCue, first surfaced in March 2012 in The Wall Street Journal, but they were just a rumor until Erik Huggers, the head of Intel Media, announced at the AllThingsDigital conference last February that the Santa Clara, Calif., company intended to debut its product in 2013.

Huggers said at the time that Intel was seeking to offer "a bundle that can be curated by the consumer," with the set-top box likely containing a camera that would recognize users and gestures; Intel acquired Israeli gesture-recognition company Omek Interactive in July, a move thought to be related to the Intel Media effort.

Krzanich, who took over the company in May from previous CEO Paul Otellini, has not seemed enthusiastic about the project, though, telling Reuters in November, "We're being cautious."

"We're experts in silicon, we're experts in mobility, in driving Moore's law," Krzanich said then, "but we are not experts in the content industry and we're being careful."

Intel built up the team behind Huggers to roughly 350 employees, and those workers will be offered employment with Verizon to stay in Santa Clara under the management of the current team, the companies said in Tuesday's news release.

"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," Verizon CEO Lowell McAdam said in the news release.

Several Silicon Valley companies have sought to disrupt the traditional cable industry in the ways content is delivered to consumers, with TiVo's digital-video-recorder technology eventually being accepted by the industry and Netflix's streaming service still considered a rival. Apple has offered its Apple TV set-top dongle for many years, with rumors of a full TV set or more involved offering around almost as long, and Google has moved from its smart-TV effort to Chromecast, which allows users to beam streaming services directly to a television.

Intel stock dropped 1 percent to $25.59 in Tuesday's session on Wall Street. The world's largest semiconductor company announced last week that revenues declined in 2013 from 2012's total and predicted little to no revenue gains in 2014.

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