Intel (Nasdaq: INTC) is so eager to get into the IPTV business that it's "offering to pay as much as 75 percent more than traditional cable rates" for content, sources familiar with the situation told Reuters.
That could be a risky policy if those costs are passed along to subscribers, who are increasingly unhappy with the cost of pay TV services. That in turn has led to a steady stream of cord cutters. According to statistics from SNL Kagan, the highest per-subscriber fees were $5.15, charged by Walt Disney Co.'s (NYSE: DIS) ESPN. This is an important statistic because, sources told Reuters, Intel is "basing its 50 to 75 percent premium on listed average SNL Kagan subscriber fees."
So far Intel, which is moving from inside the box to inside the home with the IPTV play, has reportedly reached agreements with CBS, News Corp. (Nasdaq: NWSA) and Viacom (NYSE: VIA) and is in ongoing talks with Comcast's (Nasdaq: CMCSA) NBCUniversal. Representatives from those firms, as well as Disney's ABC and Time Warner (NYSE: TWX), declined to comment on the story.
Another stumbling block for attracting subscribers--but probably a plus for content providers--is Intel's apparent willingness to block viewers from skipping commercials on the first run of a show.
All in all, Intel has a tough row to hoe. The company made it clear in February that it was anxious to build a set-top and offer service to compete with the likes of Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN) and Google (Nasdaq: GOOG)--a group that has not actually blazed any IPTV trails to date--with a package of smaller bundles of content than what is traditionally offered by satellite and cable services.
Intel spokesman Jon Carvill told Reuters that the company is still on schedule to launch the service this year but offered up little more about potential content deals.
For more:
- Reuters has this story
Related articles:
Top Intel Media engineer leaves endeavor
Intel closes in on programming deals for OTT service with Viacom, NBCU, Time Warner
Intel says its OTT service will expand pay TV space