Feb 14, 2013

Intel Inside Your TV: Evaluating The New Intel Virtual MVPD Announcement

In an announcement so expected it seemed almost anticlimactic, Intel finally fessed up that they were indeed building a virtual MVPD and its companion device. The venue, the Wall Street Journal’s D: Dive Into Media Conference, was as puzzling as the tone of the announcement itself, which took the form of an interview All Things Digital founder Walt Mossberg did with Erik Huggers, the Dutch-born project lead.

Huggers spent the entire interview prevaricating. About the only statement he made without adding a weasel was “I am Dutch.” The rest was just one waffle after another: he couldn’t announce the name of the “consumer electronic device” Intel was introducing, other than to admit it wouldn’t be named “Intel.” He couldn’t say whether content deals were in place or who they were with. Just a purposely ambiguous “We are working with everyone right now.”

Whatever that means.

In a nod towards the Theater of the Disingenuous so common to the tech world, Huggers actually tried to convince a skeptical Mossberg that “carefully curated” content bundles were a better thing than a la carte, resorting to the old rhetorical trick of repeating his main point over and over, lest someone ask him to explain.

Not that Mossberg and his co-host Peter Kafka didn’t try. They grilled Huggers on that assertion and pulled out the sharp knives when the topic moved to Intel’s facial recognition feature, which uses a built-in camera to determine which family member is actually watching, so as to surface their preferred programming. (It wasn’t clear what happens if people are watching en famille, an equally common scenario.) While facial recognition software is not in and of itself creepy, Huggers’s description of the non-user initiated manner in which the Intel device would automatically recognize users prompted Kafka to ask him “don’t you think a lot of people are going to be skeeved out by that?”

Like I said, it wasn’t an easy interview.

Intel seems to be working off the notion that “if you build it, they will come.” They, in this case, being the various TV networks whose programming they need to make the Intel device a success.

The one tangible benefit Huggers spoke about was true BBC iPlayer type catch-up TV, where every single show would be available for 7 days after it was first broadcast. Though here again, it was unclear whether this was merely something Huggers would like to see or a real feature.

Stripping away all the “maybes,” it seems the Intel TV will be positioned as a premium product-- Huggers acknowledged it would not be a discount play-- where consumers would actually pay more for TV service in order to have a much prettier, more intuitive and useful interface. How much more this service would cost is up for debate. One source I spoke with estimated that Intel would need to pay the networks a 25% premium versus the other MVPDs for content. 

What’s more, while Huggers touted the Intel device’s groundbreaking interface, the “dream team” he mentioned assembling from Apple, Jawbone and Microsoft seemed to consist of sales and marketing superstars: there was no talk of anyone with UX experience, though that may have just been an oversight.

Bottom Line: While Intel is to be lauded for their commitment and for having come this far, the product may turn out to be a tough sell. 

First and foremost, there’s the content issue: I have a Verizon app on my Xbox that has around 75 channels on it. Unfortunately, none of them are channels I ever really watch (e.g. ESPN and the major networks are not on there.) If the Intel offering can’t get beyond a similar scenario, it’s likely to be dead in the water, particularly if it’s a premium product: why pay more for something I don’t watch? Intel’s plan seems to be to launch with a small group of channels and then hope the larger networks come on board as the product becomes more successful, but that’s far from guaranteed.

Another hurdle Intel will face is the difficulty of installation. This isn’t a Roku box that easily plugs into your existing TV system, this is a whole rip-and-replace move, and it’s going to have to be really, really good to get consumers to chuck their existing pay-TV service (set top boxes included.)  Given the premium price, this is going to be a whole-house install, not just something you throw on the TV in the spare room. Add in too, the strong aversion people outside the early adopter cohort have to somewhat complex installation scenarios.

The final hurdle Intel faces, one that several audience members brought up to Huggers, are the bandwidth caps the ISPs can impose, a particular issue given the amount of bandwidth that video eats up. While Huggers gave a long answer about advances in video delivery systems and the rapid growth of bandwidth capacity, he glossed over the most salient fact: for most people, their pay-TV provider is also their ISP, and the MVPDs are not going to want to give up that revenue stream.

All of which is too bad. The TV interface, as Huggers pointed out, does look like it was transported directly from a 1994 CompuServe page and finding what to watch has become more complicated and frustrating than ever. The MVPDs have flubbed the chance of creating a decent catch-up TV function, pushing a lesser version of that off onto Amazon and Netflix, while the price of all of the above keeps spiraling upwards. 

A well-designed, feature rich platform would be godsend for consumers, one I believe people would indeed be willing to pay a premium to own. 

If only the networks and MVPDs would play along.

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