Intel announced Tuesday that it sold off the assets of its Intel Media unit to Verizon, formally ending the chipmaker's forays into the Internet-TV space.
Intel Media incubated Intel's OnCue Cloud TV platform. If you don't remember OnCue, this was the elevator pitch: All of the pay-TV content you're used to getting from cable, delivered over-the-top (that is, online) and alongside web-only channels.
In essence, Intel wanted to help rethink the pay-TV space, and it wanted to do so in a way that was both innovative and appealing to consumers.
The Future of Television
At a dinner last May, I was part of a small group of reporters and analysts that had met with members of the Intel Media team, including the group's leader Erik Huggers. We got to preview the company's OnCue Cloud TV service.
The team Huggers tapped was brimming with talent. Former Apple engineers, marketers from Disney and broadcasting executives were on board and rearing to go. The message was clear: This was the future of TV, and Intel was ready to play.
The product demoed was extremely compelling. The set-top box, which was basically the same as Comcast's cutting-edge X1 box, delivered live TV over-the-top (OTT), but also served up online content in a seamless interface.
One of the biggest challenges with the current pay-TV landscape is finding a way for Netflix, Hulu Plus and Amazon to sit alongside ABC, FOX, ESPN, CNN and AMC. It's frustrating to have to switch inputs to search for content on another service. As a premium-cable subscriber, I often find myself having to pre-check apps on my phone or iPad before deciding to watch TV on the cable box or via streaming services.
The new TiVo Roamio comes closest to unifying the overall viewing experience by bridging the gap between what's on right now and what's available to stream (and Microsoft is on the right track with the Xbox One), but it still feels restrictive because of the limitations within the cable system itself.
OnCue was going to change that. The early demonstration I saw showed a very promising user interface, something Intel noted was a huge focus. In addition to a standard time-based guide display, users could browse channels in groups or genres. They could also search programming and preview shows to watch in one seamless interface. Netflix content would appear alongside video-on-demand content, as well as upcoming or currently airing content.
One of the hallmark features of OnCue was a three-day running programming archive. You could basically rewind TV up to three days back on any channel, using a giant networked DVR. This is similar to what Dish Network does with its Hopper DVR, except it would exist for all of the stations that a user subscribed to.
In addition to in-home service, Intel was planning on offering mobile and tablet apps for subscribers, creating a full TV Everywhere experience.
Make no mistake, though: OnCue wasn't going to be a cheaper alternative to cable. Intel was on record saying that the plan was to price the service in line with current TV offerings. Instead, the value proposition was that rather than having to finagle multiple boxes and services, a family could have just one experience, all delivered over-the-top, and accessible on multiple devices.
For a TV viewer like myself — someone who not only subscribes to an expensive cable package (HBO, Showtime, Starz and an NHL package), but also Netflix, Hulu Plus, Amazon Prime, Aereo and Redbox — OnCue was the holy grail of television.
I walked away from the OnCue demo thinking that Intel had just shown off the Apple TV prototype of our dreams.
That's why I'm saddened — although not entirely surprised — that the dream, as it existed in May, no longer exists.
Yes, Verizon will likely take many of the best elements of OnCue and the Cloud TV platform, and incorporate it into its FiOS TV offerings. It might even use some of the tech as a way to spur an online-TV offering for its wireless users. But I'm not convinced that Verizon's vision for the future of television necessarily coalesces with what Intel Media wanted to create.
The End of the Dream
Intel was originally supposed to launch OnCue in the fall of 2013. As late as July 2013, Intel Media was looking for employees to join its division leading up to the launch, and was also planning on opening offices in New York and Los Angeles.
The fall launch date slipped, and rumors soon spread that Intel was looking to partner with Amazon or Samsung to get the program out the door. By the end of October 2013, AllThingsD reported on rumors that Intel was attempting to sell Intel Media to Verizon.
At first blush, it might seem like content providers were a barrier to OnCue's launch, but this is only partially true. Over the last few months, I've spoken with a number of sources close to content partners who all agreed that deals with Intel were all but signed. The problem wasn't so much getting the content providers to agree to offer content to Intel, but instead, the cost of that content.
A Reuters article in November pegged the initial content fees at hundreds of millions of dollars. Mashable sources confirmed that this is an accurate number.
That kind of investment came at a precarious time for Intel. The Intel Media group was started under Intel's old CEO Paul Otellini. Not only was its new CEO Brian Krzanich somewhat cautious about the TV project, he had bigger company concerns to worry about.
The collapse of the PC market in 2013 has had a significant impact on Intel's bottom line. The company has halted plans for its $5 billion Fab 42 chip factory, and intends to shed 5,300 jobs in 2014. It only makes sense that Intel would want to focus on fundamentals rather than incubated projects that don't speak to its core competencies.
Krzanich discussed Intel's challenges with Recode earlier this year, saying:
When you go and play with the content guys, it's all about volume. And we come at it with no background, no experience, no volume. We were ramping from virtually zero and so what we've said is we are out looking for a partner that can help us scale that volume at a much quicker rate.
What Apple (and Others) Can Learn From OnCue
OnCue was an ambitious project, and many in the industry never expected to see it hit the market. Call me a romantic, but I truly hope that the idea of unifying over-the-top broadcast channels alongside web-only content in one beautiful interface can be a future reality. I really don't care if the person that makes it work is a cable company, a software company or a hardware maker — I just want that reality to exist.
What the end of OnCue tells us is that it's not just about having the best interface. It's not even about getting content partners to agree to let you use their content. To succeed in this space, companies need a few core tenants:
The budget for purchasing content upfront
The ability to get in a large number of households across the country
Willingness to see the deal through all the way to the end
In other words, if Apple (or Sony) is serious about remaking our vision for pay TV, it's going to have to pay for content — and pay dearly — and have the stamina to let the product exist without being an instant success. And to be clear, success is by no means guaranteed.
Still, I have hope that someone — and maybe it will be Verizon — will finally crack the nut of combining regular TV with web content. The vision I saw in May was glorious, and I deeply want it to exist.
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