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Verizon Considering Purchase of Intel’s Video Service

2 Jan, 2014 By: Erik Gruenwedel

Verizon reportedly is in negotiations to acquire Intel’s stillborn Internet-based video platform, OnCue. Intel is looking to get $500 million for the platform that was set to offer both subscription streaming, transactional VOD and electronic sellthrough.

Intel, which had been working with on the platform for years, threw in the towel as third-party content rights escalated — largely due to Netflix and, to a lesser extent, Amazon Prime Instant Video, driving up rates through exclusive deals and original content.

“We believe we have a great user interface and the compression-decompression technology is fantastic. But in the end, if we want to provide that service it comes down to content. We are not big content players,” Intel CEO Brian Krzanich told Reuters last year.

Some analysts contend OnCue would be a good fit for Verizon’s FiOS fiber optic TV service, in addition to Redbox Instant , the joint-venture subscription streaming and kiosk rental service it co-owns with Redbox’s parent Outerwall.

“Verizon would be a good home for Intel's OnCue Internet-based TV service,” wrote Ryan Sullivan, analyst with TheMotleyFool.com. “Verizon could easily market the OnCue to its 100 million mobile and FiOS users. OnCue would be a good addition to Verizon because the company is already in the content business with Redbox Instant and FiOS TV.”

Sullivan admits consummation of a deal comes down to whether Verizon can negotiate a fair price with Intel, and then amortize content costs with FiOS and Redbox Instant.

“Television, as we know it, is on the verge of a transformation,” Sullivan wrote. “The companies that prevail in this disruption could go on to earn their shareholders untold sums of money. And the companies that lose could very well end up in bankruptcy court within a matter of years.”

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