NEW YORK – On Saturday, Intel (NASDAQ:INTC) announced that the company was shifting their web-based television strategy and is now seeking partnership to move the project forward. According to a person with knowledge of the project who asked not to be named, the project is behind schedule and will not start by the end of 2013, The person added that the company is looking for a partner with a base of internet subscribers or rights to films, and televisions shows – sounds like Netflix (NASDAQ:NFLX).
The company’s web-TV project has been slowed under new CEO Brian M. Krzanich, who took over in May as he has put emphasis on getting Intel chips into mobile devices. The change in strategy for the web-TV project reflect a view from management that while the company has built an advanced set-top box, the need a content partner with existing customers and marketing experience to get the project off the ground.
According to digital television consultant Bernard Gershon, ‘for Intel or anyone else to launch and pay the networks what they’re getting from the cable companies makes it a very difficult proposition.’ Meanwhile a spokesperson for the company declined to comment. Potential partners include Amazon (NASDAQ:AMZN) and Samsung (KS:005930). However, Amazon and Samsung both declined to comment.
The slow progress of the web-TV project is a setback of the company’s broader effort to develop new revenue streams to offset the decline of the personal computer. At this point, investors are less than enthusiastic about the company’s prospects. According to Doug Freedman, at RBC Capital, ‘they have talked about being not just the set-top box but the ecosystem. In the past, when Intel has tried to mess with ecosystems outside of PCs, they have been unsuccessful.’
On Friday, Intel’s 2 percent drop was the biggest among members of the Dow Jones Industrials Average – year-to-date shares are up 11 percent.
Freedman added that a shutdown of the web-TV project might not be such a bad idea, adding ‘if they shut it down, it might be a good thing because it would mean they are focusing on markets where they have core competencies. What does Intel know about media distribution?’ Freedman’s analysis is probably the most correct review of Intel’s position while internet television is a technology play, it will most likely be won by players with direct access to content.