Wednesday, November 26, 2014
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Video wars: Verizon-Intel vs Comcast

Says Gigaom

Video wars: Verizon-Intel vs Comcast

Why is Verizon buying Intel's OnCue Media? To fight Comcast, of course, writes Gigaom here.  

Wait, what? Weren't Comcast and Verizon working together? Last year's news, writes Gigaom: Frustrated by the expense of expanding its FiOS TV network, in 2012 "Verizon decided to team up with with traditional cable operators," led by Comcast, "the cable company with the largest R&D team in the industry." They combined promotion efforts and started Nuon, which was suposed to join broadband, pay TV and mobile video as an alternative to TV video, competing with Roku and Apple TV -- "a Chromecast for TV Everywhere." The box to be built by China's Huawei.

"But in August of 2013, Verizon suddenly pulled out of the partnership with Comcast, which essentially killed Nuon before it was ever announced." What changed? Verizon Wireless agreed to buy out partner Vodaphone this winter for $130 billion, "setting the stage for a much more aggressive integration of all of Verizon’s businesses." Also, Verizon has expanded its Digital Media Services "to prepare itself for an online TV service." And, it's expanded its TV reach beyond the FiOS area with services like Redbox Instant, whose boss, Shawn Strickland, was just promoted so he also heads FiOS TV and all Verizon online video.

Verizon and Intel say their deal “will accelerate the availability of next-generation video services, both integrated with Verizon FiOS fiber-optic networks and delivered “over the top” to any device." Against whom? "No matter how you look at it, the answer always comes down to its former Nuon partner Comcast. The cable giant is one of the few pay TV operators with extensive R&D efforts, capable of building and deploying next-generation TV products...

"Comcast is working on a cloud DVR, is getting ready to roll out its next-generation X2 set-top box and has a number of of other products in the making that are far ahead of any of its competitors... They seem quite dedicated to building products and defining the future of TV rather than (staying) the course...

"With Intel Media’s OnCue service, Verizon is getting a chance to truly compete with Comcast...  The company could simply transition FiOS TV to a true IP-based platform... Even if that was all that Verizon wanted to do with OnCue, it would still be a good investment.

"However, pretty much everyone expects Verizon to do more... An internet-delivered pay TV service would give the company a chance to finally break free from the chains of its FiOS footprint and market its TV service everywhere... it could easily bundle TV with mobile to create its own double- and triple-play offerings. It also could turn cable companies like Comcast into a dumb pipe and offer a competing TV service over their infrastructure.

"And there is a third option: Intel publicly described Intel Media’s OnCue service as a direct-to-consumer business, with plans to sell its set-top box through retail chains and directly sign up individual customers... Smaller, regional operators are screwed in this world — and Verizon may just decide kickstart its TV efforts by partnering with some of these players... That way, it could grow and refine its TV offering until it’s one day ready to take on Comcast on that company’s home turf."

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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