Updates: Coming Soon: Intel’s Must-See TV [Barrons.com, June 22, 2013]

The chip giant readies a TV subscription service powered by a set-top box unlike any other.

Full disclosure, dear readers—I’m not a TV viewer. I chucked the set years ago and mainly watch things on computers.

But then, television hasn’t changed much in decades, so I feel I’m still qualified to opine on the boob tube’s future. And two weeks ago, I was fortunate enough to glimpse a possible part of that future at the Santa Clara, Calif., headquarters of Intel (ticker: INTC), where I saw a TV service that is novel, elegant, and highly desirable, even to a television Luddite like me. The service faces a number of hurdles, including potential obstruction by the cable and telephone industries, but what I witnessed could take Intel in a thrilling new direction.

Sometime this year, the chip giant will offer a set-top box at retail, with a subscription service that brings you live television over your broadband Internet connection.

It is, in industry argot, an “over the top” video connection, requiring no actual TV package from the four major “multiple system operators,” or MSOs, as they’re called—Comcast (CMCSA), Cablevision (CVC), Time Warner Cable (TWC), and Charter Communications (CHTR)—or from Verizon Communications (VZ) and AT&T(T).

WITHOUT GIVING TOO MUCH AWAY, the user interface seemed to hover beautifully above the currently playing show. An elegant simple menu made it easy to switch between channels or to pick and rent a recent film. It was light years from the cumbersome garbage that takes up most of the screen when using a standard cable-channel picker.

There was a wide array of popular channels to choose from that would be familiar to any couch potato, though the final lineup is still being formulated. Equally important, when you hit the button on the remote, the TV seemed to jump to the next channel faster than is typical on cable. There also is a time-shifting aspect that goes beyond DVR, allowing you to go back through recent episodes.

One wonders: Why hasn’t TV always been this way?

Others who’ve viewed the project are enthusiastic, too. “The No. 1 thing I noticed was speed,” says Patrick Moorhead of Moor Insights & Strategy. Intel’s horsepower in the set-top is partially responsible for this, but multiple data centers that Intel is building to serve video also were a factor. “A lot of the value comes from what they’ve done on the back end,” says Moorhead. “They have the highest-performance Intel servers and video-encoding technology.” And he notes, “This is live television,” unlike other over-the-top offerings, like those from the TV network consortium Hulu, Apple‘s (AAPL) AppleTV,Netflix (NFLX), or closely held Roku, which merely provide on-demand content from a back catalog. “It’s something I’ve never experienced before” in an Internet offering, Moorhead adds.

No less thrilling is the fact that Intel, which makes $53 billion in yearly revenue from selling chips, and spends billions to make them, is becoming both a hardware and software vendor.

The project is the effort of Erik Huggers and his staff of 350 people. Huggers, 40, won praise for developing the iPlayer for the BBC, a piece of video software that allows one to follow the channel’s TV and radio broadcasts. He came to Intel two years ago to advance efforts to sell chips to set-top makers. He made a bold move in telling his boss that the $4.5 billion TV-chip market wasn’t desirable. “The market was split up between 20 or more silicon providers, and it was a race to the bottom on prices,” says Huggers. “I said, ‘I don’t know how we ever turn that into a profitable market.’ ” Instead, he pleaded, “Release me to go after the $500 billion television market in a very different way.” He got his wish.

Erik Huggers over het televisieproject van Intel (Erik Huggers ons the television project of Intel) [MT Management Team, May 13, 2013] the essence of which is summarized below (the quotes were translated from Dutch):

Hired in April 2011 and spending with 12 others 3 months on the plan Erik Huggers suggested that instead of manufacturing and selling chips for smart TVs and similar products Intel should take a different course of developing a complete TV solution. He got an approval for that in December 2011 and since he managed to grow the project to a 300+ people organisation working in tight separation from the rest of the Intel and in stealth mode typical of Silicon Valley. He used the so called acquihire approach (a novel thing although used by Facebook very much) to speed up the process when “you at once take a whole team of a company over, but not the company itself”. Intel Media bought in this way a number of “very targeted small businesses”. So it was only twelve months needed to arrive at “a device, the software, the user interface, design, packaging, branding, all services, the back-end and various deals.”

Such urgency was essential “because I think the time for over-the-top live television has arrived.” The product will initially be launched in the U.S. only as it is the largest media market in the world which also happens to be the most difficult one as it is so saturated and “ if you come up with something new, you have to have something very good.” They are going to offer “live TV, catch-up TV, Video On Demand as a transaction model, an iTunes-like service so that you pay per viewing time. And in addition, we will offer what they call in the United States electronic selltrue. You can buy a digital copy of a film in the cloud, which is playable on various devices.” That is there will be various payment models behind the television service of the Intel Media.

It was initially difficult to convince content providers to come on the board. He said that “there are a total of nine parties in America depositing content to consumers, plus another 5 or 6 providers like Comcast. It is a very concentrated market, where we now stand as a newcomer. The balance in this market is very, um, let me just say very interesting. The established parties are very close to each other and have a lot to do with each other. The idea to deliver video over the Internet television is as revolutionary. We will use the infrastructure of the cable company, which is the same infrastructure they sell to consumers. It was so difficult to explain that, now it’s purely for the execution.”

With 300+ people Intel Media will compete in such an environment. It is even more unusual as “we compete with companies like Comcast, which has 80,000 employees, and it’s just one of the many parties that are active in this market” he said. They are going to launch before the end of the year and see the iPod as an example to follow. He said: “Look at the rise of the iPod. Around 2004, in 2005 there were hundreds of MP3 players, but none worked really well. Then came the iPod and was at one time game over for all other players. The current state of affairs of smart television and streaming boxes is similar to the mp3 world for the introduction of the iPod. It is interesting that a lot like Apple, to date at least, very disappointing in television. Apple TV works fine, but it is not revolutionary. ” 

Regarding his first public announcements two months ago (which is detailed in this original post below) he said: “The reason I sit at All Things Digital on stage was because we had to show. Just 4 or 5 weeks before, during CES, senior officials from the media industry had seen our product. Sometimes more than 10 people per company. So between 100 to 200 people have seen the device, and all like to talk. … In addition, we were just starting to roll out the product to Intel employees. First it was tested by fifty families, but we wanted to test it on scale. So currently it is used by 1,000 families in Arizona, California and Oregon. Soon we will go to 5,000 families. They are all Intel household, so with people who are with us on the payroll. Now as it is seen slowly but surely seen by more people, it is better to put a story myself. You don’t have control, but so you can do a twist of your own. You don’t want it through the back door on some blog. But we still have very many details omitted. That we keep it that way, until we are ready.”

End of updates

Excerpts from Video – Dive Into Media: Intel’s Erik Huggers on What’s Next for Web TV [Feb 12, 2013] – the full transcript will follow in a separate section later on:

[00:38] “We have been working for about a year now to set up a new group called Intel Media, … a new group focused on developing an Internet TV platform.”

[~2:00] “For the first time … we will deliver a new consumer electronics product that consumers will buy directly from us or through retail under a new brand. This is obviously associated with Intel brand. It is an Intel powered device, it is a consumer electronics product with beautiful industrial design powered by, obviously, an Intel chip. That’s not where it ends, it’s not just the device. Where it really gets interesting is, we are working with the entire industry to figure out how do we get proper TV delivered via the Internet to consumers.”

ADDITIONAL INSERT BBC iPlayer (Global) – Available for iPad, iPhone and iPod Touch! [BBCiplayerglobal YouTube channel, Sept 28, 2011]

[03:08] “At the BBC we launched the product in 2007 called BBC iPlayer. The iPlayer is the promise to consumers, to audiences that we would make the unmissible truly unmissible. And so what does that mean: basically all the BBC output, everything on radio and television networks, is available from transmission points plus seven days on over 650 different devices. And so this is not a cherry pick of a variety of products for output, this is literally everything. So if you missed something you don’t have to record it because it’s already there. It’s a cloud based service that offers you catch up. [03:50]

ADDITIONAL INSERT BBC WiE: Daniel Danker on evolving the BBC iPlayer [TheBBCAcademy YouTube channel, Aug 9, 2012]

– Android: An update [Dave Price, Head of BBC iPlayer on BBC Internet blog, Dec 12, 2012]: “Android as a platform is becoming increasingly complex and fragmented with a huge difference between video playback capabilities across the 1500+ Android devices.”
– BBC has new competitors, warns iPlayer boss Daniel Danker [BBC Ariel, Feb 8, 2013]

Daniel Danker, the general manager for on-demand and iPlayer, said that the BBC’s fiercest and most nimble competitors are no longer likely to be Sky, Channel 4 and ITV.

‘I think we are measuring ourselves against the wrong competitors, because actually the companies that are most likely to be disruptive in what we do are Google through YouTube, Amazon through LoveFilm and Netflix,’ he told Ariel in an exclusive interview on Thursday.

… Today, iPlayer reaches about 25% of the UK every month, he said, but YouTube reaches about 40%. …

… American giant Netflix is leading the way by releasing its drama House of Cards online to its subscribers. It took a gamble by releasing the entire series, a remake of a BBC political drama from 1990, immediately.

Danker, an Israeli-born American who spent 11 years at Microsoft, said the series is ‘pretty good’ and has attracted big names, including Kevin Spacey. He called Netflix ‘innovative and nimble’. …

… The iPlayer manager said that in YouTube’s Soho offices, artists and content creators are being asked to ‘professionalise their content’ at specially built studios. He predicted that it won’t be ‘skateboarding chimpanzees’ for much longer, but high-quality content. …

[~12:00] “I don’t believe that the industry’s ready for pure a’la cart [where you only pay for the channels you want]”, he stated and suggested that this would be a great opportunity to create offers that provide users with greater flexibility. “I believe there’s value in bundles, I believe that is a form of curation” he concluded.

[~ 13:30] “This thing looks like a leap in time of 10-20 years compared to what you have today. That is much more personal, that learns about you, that actually cares about who you are.”

[~14:00] “We think there’s real value in the ability to actually identify the various users. Today, television doesn’t really know anything about you. It’s the same television service for everyone in the household. In order to actually recognise who is there and to offer you your personal experience, rather than having to log in or put your fingerprint or do a retina scan whatever, to make it completely seamless you need a camera. If you don’t like the idea of a camera, you think it’s creepy there is a nice little shutter and you just close the camera” Huggers said.

[~19:00-20:00] “Intel is very interested in getting into consumer businesses, having a direct relationship with those consumers. Intel as a company is making a big shift towards, what Intel calls, becoming an experience driven company.”

[~22:00] “We have gone out of our way to bring a completely new class, new type of skill sets into this crew. And we’ve set the group up in such a way that it is run in its own building, complete own building, with our own security, we have our own culture. We are still proud to be part of Intel, don’t make any mistakes, but this is a new effort.”

[~25:00] “It’s not a value play, it’s a quality play where we’ll create a superior experience for the end user.”

[~35:00] “The model that we are envisioning is a model where live TV and catch up TV all live in the same paradigm. These are not different applications, and so if you’re a programmer why would you want your catch up programs to live in an app somewhere else? Why doesn’t that live under your brand?”

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Video – Dive Into Media:
Intel’s Erik Huggers on What’s Next for Web TV – WSJ.com [Feb 12, 2013]

Intel’s Erik Huggers took the stage with Walt Mossberg at D: Dive Into Media on Tuesday [Feb 12, 2013] to talk about the company’s forthcoming TV device that he describes as revolutionary.

My transcript (lead reporter is Walt Mossberg, his second in command is Peter Kafka):

[00:38] We have been working for about a year now to set up a new group called Intel Media. It’s a completely new division with new people, sort of a mix of existing Intel people with a lot of people from outside the company. To give you an example we hired people from Apple, from Jawbone, from Microsoft, from the BBC, and the list goes on, even Netflix and Google. So it’s a new group focused on developing an Internet TV platform.

There’s no other Internet TV platfom? 

There’s quite a few out there but my opinion is that not many have yet actually cracked it, not many have truly delivered.

Have any cracked it in your opinion?

No, actually. That’s my opinion.

Just to be clear. You are talking about becoming a pay TV service to deliver video over the web like instead of paying cable company for video I will pay you.

That’s right. And so for the first time what we will do we will actually deliver a couple things to consumers. We will deliver a new consumer electronics product that consumers will buy directly from us or through retail under a new brand. This is obviously associated with Intel brand. [01:56]

[02:12] It is an Intel powered device,  it is a consumer electronics product with beautiful industrial design powered by, obviously, an Intel chip. That’s not where it ends, it’s not just the device. Where it really gets interesting is, we are working with the entire industry to figure out how do we get proper TV delivered via the Internet to consumers.

This is an over the top service where we will deliver both live television, broadcasts, cable nets and other output, but also have catch up TV and introduce that properly to this market Because I personally think catch up TV still really doesn’t exist here, not as it exists in Europe today. And will have on demand and a host of applications. [02:57]

[03:08] At the BBC we launched the product in 2007 called BBC iPlayer. The iPlayer is the promise to consumers, to audiences that we would make the unmissible truly unmissible. And so what does that mean: basically all the BBC output, everything on radio and television networks, is available from transmission points plus seven days on over 650 different devices. And so this is not a cherry pick of a variety of products for output, this is literally everything. So if you missed something you don’t have to record it because it’s already there. It’s a cloud based service that offers you catch up. [03:50]

In the UK with the BBC what happened was that iPlayer became sort of synonymous with on demand. Just like Xerox is copying and Kleenex is tissues. So I think that in this market we have yet to see a proper catch up TV service, like the one that I just described. [04:09]

…

[04:45] When you say proper TV, I was struck by the term of that, I like that, proper TV, because you are talking about what I get through my cable box. And this is the key, because I have a Roku, I have an Apple TV on my big television at home. They give me a lot of interesting things but they don’t get me cable. … the cable box right up to pay a lot of money to the cable company and the effect of three things. You tell me you’re going to be one thing that would do almost three things? 

Our ultimate vision is you need one …

Ultimate vision? That means … 

Ultimately we think there is an all in one solution. … Rome wasn’t built in a day. It takes time sometimes but where we will start, to be clear, is: we will have live TV, catch up TV, consistent. We will have on demand and we’ll have a set of applications. But the proper TV piece is something that I want to just pause for a second. Why do I say that?

[05:57] I think that what we’ve seen so far in the industry are sort of … it’s like the interface is that you have to date on all these variety of television connected devices [the so called smart TVs] they all look like Web pages from the 1990s blown up to ten foot.  … They’re pretty  clumsy to use, they are hard to use and … When I say proper TV the other thing I think about is I think about when my five year old came to me over the weekend literally, and he is — like probably every other five year old — a wizard with iPads and Android devices, he is completely self sufficient. Yet he comes to me on Saturday morning and gives me two remote controls and says ‘Daddy can you please put up …’ some PBS stuff, I forgot what it was, because he literally doesn’t know how to use it. It is impossible. [06:56]

[07:53] So are you doing something different or are you going to do what I am already getting?

We are going to do a lot of things different.

First of all, in the pay TV space today what you get from experience perspective is, let’s talk about the EPG (electronic program guide) for just a second. EPG today is equivalent to a spreadsheet, it’s basically columns and columns and rows and rows, and you have to go through and through and through it, until you’re blue in the face. It is not very friendly, it is not very easy to use, and it is sort of feels like, it reminds me of my days of my first computer, the Commodore 64. There’s a lot of room for improvement there. If you look at what people are used to today on iPads, on iPhones, on Apple TVs and other devices out there, there is a massive gap. So I think that’s one, the incredible user experience that is completely easy to use. [We have] the people that we brought over from the UK, the people that did the iPlayer UI. So we’ve got a team that really know how to do this sort of stuff.

[8:00] The second thing is that we’ll have a scenario where you don’t need a lot of different inputs anymore. You do not need to have all these different HDMI inputs. Today in my home I had to buy an HDMI switch because I have too many devices. [09:22]

[10:15] The bundle thing that Peter [Kafka] mentioned is really really important. It’s a piece of the puzzle. There’s loads of people who deeply resent their cable and satellite company, for a number of reasons, but one of them is this bundle. I have to buy all these channels, I don’t watch all these channels, I don’t want all these channels. … You are going to revolutionize TV, you are going to bring us this box, but a minute ago I heard you say you’re still going to have these bundles. Is that right? 

[11:17] I agree with you that what consumers want is choice, control and convenience. I do believe that there is value in bundles actually. The whole world talks about curation because there’s such a mass of information out there. In a way if bundles are done right, bundles are bundled right, for the lack of a better way to explain it, then there’s real value in that. … I think there are opportunities out there to create a much more flexible environment where the end user has more control than what they have today. I don’t believe that the industry’s ready for pure a’la cart. [11:56]

[12:19] All I’m talking about … is the fact that I believe there’s value in bundles. I believe that is a form of curation. [12:27] … it’s somewhere in the middle [between current bundles and pure a’la cart] [12:34]

So it’s still bundles, but more intelligent bundles, or smaller bundles … 
That’s a great way to explain things.
… things that are more logical to me as a consumer?
As a consumer.
I may be so glad to not see the bundle Comcast makes me buy that I’ll say these guys at least giving me a better set of choices
That’s the hope.
It’s not a pure a’la cart but at least a better set of choices 
It’s way towards more control, more choice for audience. [13:00]

Are we going to save money?

What this is not about for sure, it’s not about a value play. … What I believe is that if you get a vastly superior experience where the delta literally, when you get to see it ready to show you, this thing looks like a leap in time of 10-20 years compared to what you have today. That is much more personal, that learns about you, that actually cares about who you are versus being just … [13:40]

The boxes would be a caring box? 
We hope so. …
… There is a less positive way to spin that caring box, this is the box that watches what you are watching, and targets you with advertising … 
We think there is real value in the ability to actually identify the various users. Today TV doesn’t really know anything about you. It’s the same TV service for everyone in the household.

… little creepiness here?

I don’t think so because one of the features we put on there is, in order to actually recognize who is there and to offer you your personal experience, rather than having to log in or put on your fingerprint or do a retina scan whatever, to make it completely seamless, you need a camera, but if you don’t like the idea of a camera, you think it’s creepy there is a nice little shutter and you just close the camera and off your uncle. [15:00]

… But cameras in iPads [etc.] are for those people to turn them on if they want to have a chatter, to take pictures something with it. It’s not looking at them for the purpose of serving up ads based on them. …  

[15:58] But there is value. Let me talk about the value of a camera if we have to explain that. Imagine a scenario where you are watching your favorite TV show whenever that may be. … The idea of television back when I grow at least was that it was truly a social experience, a family experience. You’re together in the living room. What if you could actually watch that episode completely synchronized across the country and have a real social experience.

… but we are talking about the camera watching you for the purpose of targeting, and that’s not the same as voluntarily Peter and I turning on the camera

[17:02] I didn’t talk about that we will use the camera for targeting. What I’ve talked about  … it’s gonna watch you because: imagine the following scenario … I’ll give you another example. I have a Netflix account, and my five and nine year old will use that Netflix account all the time. When its my time to use that Netflix account with my wife the recommendations that I get are usually cartoons. They are not relevant to me because it’s a household account versus a personal account. That sort of the enviropnment is the living room. But if I can just … Want your kids a separate account. I’m cheap I am Dutch. … If you have the ability to actually distinguish that it’s you or Peter, or me or the kids, or me and the kids, then you can create an environment where you can recommend me ads actually relevant for you.

[18:14] Why is Intel getting into the consumer business? 

Over the weekend I visited the Intel museum for the first time. … Tjere was a quote on the wall that actually stuck with me. One of our founders, Robert Noyce, he said, apparently, don’t be encumbered by past history. You go off and do something wonderful. So that’s what we’re trying to do. We’re trying to get closer to the end user. We understand that the end user audiences have a much bigger control these days over the direction of travel.

[18:56] When you use the term end user then you’re not all the way there yet? 

Audiences, audiences … We talk about one thing. Back of our card, of the Intel Media card, it says: the audience is at the heart of everything we do. So we really care about audiences.

[19:32] Is it just because Robert Noyce said … or is it because Intel’s principal business making chips for PCs has been flat or down in recent years? 

Intel is very interested in getting into consumer businesses, having a direct relationship with those consumers. Intel as a company is making a big shift towards, what Intel calls, becoming an experience driven company. So if you think about it what better way to learn what experience driven is all about than through digital media, through a service that directly relates to audiences, that directly delivers experiences to audiences. [20:16]

…. [Will the coming CEO sign off for that as well?] …

[20:40] Intel Media is governed by a small board, some of the most senior people at Intel. While our CEO is certainly a very important proponent of what we’re doing here with Intel Media there is a very broad support for …

[20:58] Why are you going to be better at having that kind of resonance with the consumer than big companies that happened to have a lot of consumer wealth already? Apple, Microsoft … Google. These are not companies that have to come from someplace different. They are right there in the consumer space. Look at this room and look at the logos of the devices, and they don’t say Intel. Intel somewhere in the device but … The point is what makes you thinking to compete with these guys? 

In the end of the day all comes down to people … people, people, people. I spent the last twelve months putting together an incredible leadership team. We have a lady from Apple who’s been there for literally twelve years. She launched most of their iProducts. She’s our head of marketing. We have a gentleman from Jawbone who put Jawbone, the Bluetooth company, in twenty thousand retail outlets around the world. We have a gentleman from Microsoft who built the Mediaroom platform that AT&T U-verse runs on. The list goes on and on. We have gone out of our way to bring a completely new class, new type of skill sets into this crew. And we’ve set the group up in such a way that it is run in its own building, complete own building, with our own security, we have our own culture. We are still proud to be part of Intel, don’t make any mistakes, but this is a new effort. [22:43]

In many ways I sort of compare it with … when I’m [going] back in the day when I was at Microsoft, many years ago, there was this moment when Microsoft indeed got into the gaming console business, and a lot of people said what are they doing, you make enterprise software you don’t know anything about this space. Yet ten years later or maybe more it’s the enormous success … [23:10]

[23:26] Why do you think no one else [from those already consumer companies] has stepped forward [in the TV space] so far? 

I don’t know frankly. It’s hard to tell. I mean those companies [already in the consumer space and trying] should speak for themselves.

[24:16] We’ve taken the leap of faith that time is here. I mean broadband capability is here, it works. Compression of video is completely changing landscapes again. I mean we are moving to a new codec HEVC [H.265] which again compresses fifty percent better than H.264. So the ability to deliver super high quality video via the Internet live and on demand is here today. We have the silicon and the software, and the knowledge and the know how to create an incredible product with an incredible UI, with a new user paradigm. Rather than wait for others to jump into that market and see it take off we’re jumping in, and we’re going to try and make … [24:57]

[25:22] But it’s not a value play, this is not a kind of cutting our cable bill
It is not a value play, it is a quality play. It is a play where we will create a superior experience for the end user.

…

[30:57] You’ve got all these connected devices already. Why just not build apps for them?

When we started the discussion we talked about the fact that I built this thing called iPlayer in the UK. We made that service available to over 650 different devices. Everything from phones to tablets, to game consoles, to smart TVs, to Blueray … literally anything that plays back audio and video as I play on it. … It’s fair to say that with the experience that we’ve had over there in the UK, this is definitely a direction that we’re going to follow with this as well.

Why build the device it’s an excellent question. I happen to believe that if we want to deliver the experience that we have in mind for the living room there is no platform out there today where we can do that. In order to deliver on our vision of that new experience you need to control everything, you need to control the chip, you need to control the operating system, you need to control the app players, you need to control the sensors etc. That sort of the reason why we were there. If there were platforms out there where we could deliver exactly what we have in mind there wouldn’t be a need to do it but there isn’t. [32:15]

[32:30] At the end of the day I believe in the world where you have a good, better, [and] best experience. The best experience that we have in mind. We will deliver on that device that we will ship and sell to audiences.

[32:55] The programmers are taking billions and billions of dollars from the cable companies. What incentive do they have to unbundle and work in different ways? No matter how beautiful your devices are going to be, what incentive do they have to break their established business models and give you some of their content, no matter how much are they getting paid for?

[33:12] First of all I didn’t say that we will unbundle. What I said we will create new bundles. … But your question is a very valid question.

Let’s take a look at history. We went from over the air television to cable TV, to satellite TV, to telco driven television. Constantly there were new forms of distribution out there. For programmers to get new distribution is a good thing in the end of the day. So I believe that this is just another step in the evolution of distribution. The internet has finally got to a point where you can deliver a true television experience where channel zapping becomes the same experience that we lost twenty years ago when we went digital. In the analog days when you zap to channel it was instant. In today’s digital world if you zap a channel you have 2-3 seconds of nothing in your waiting. We can bring an incredible TV experience via the Internet to consumers, and that is a real opportunity for programmers.

The final thing I would say is that the model that we are envisioning is a model where live TV and catch up TV all live in the same paradigm. These are not different applications, and so if you’re a programmer why would you want your catch up programs to live in an app somewhere else? Why doesn’t that live under your brand? If you were an NBC or something like that, why do I need to go to the service provider catch up service to find the NBC programs when actually I wanted to find it through … [34:58]

[35:14] The ability to wirelessly beam things from these devices to your TV, which Apple brands AirPlay and other companies have something like it, but I think Apple’s is the only one that’s really taken off and a lot people use so far, is that can be a feature of what you do? Wireless beaming from my other devices?

This is certainly something that we’re looking for sure. It is an important use case where consumers have obviously a multitude of media capable devices, whether it’s photos, audio or video. The ability to display that on another screen a certain something I’m of intense interest.

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Historical evidence

Insight: Intel’s plans for virtual TV come into focus [Reuters, June 8, 2012]

Intel is counting on facial-recognition technology for targeted ads and a team of veteran entertainment dealmakers to win over reluctant media partners for its new virtual television service

But so far it’s proving a challenge to get the service off the ground, thanks to an unwillingness on the part of major media content providers to let Intel unbundle and license specific networks and shows at a discount to what cable and satellite partners pay.

Intel, the world’s largest chipmaker, has kept its strategy to launch a slimmed down cable TV service under wraps as the tech giant risks getting into a completely new line of business.

According to five sources who have been negotiating with Intel for months, the company is emphasizing a set-top box employing Intel technology that can distinguish who is watching, potentially allowing Intel to target advertising.

The set-top box pitched by Intel doesn’t identify specific people, but it could provide general data about viewers’ gender or whether they’re adults or children to help target advertising, two sources said.

Intel’s plans put it in the middle of Silicon Valley’s battle for the living room. Heavyweights such as Apple, Amazon and Google believe the $100 billion U.S. cable television ecosystem – dominated by major distributors such as Comcast and DirecTV Group and program makers like Walt Disney Co and Time Warner Inc. – is ripe for disruption for reasons ranging from shifting viewer habits to ever-increasing programming costs.

While none of these companies have so far been able to make major inroads, Intel thinks it can build a better set-top box and over-the-top subscription service to deliver TV content to consumers, even though the initiative catapults it into virgin market territory. A successful TV service showcasing Intel technology could be a big step toward making its chips prevalent in more living room devices.

“If they can create a virtual network and it incorporates proprietary Intel technology, they could certainly bring something different to the subscription TV model.” said JMP analyst Alex Gauna.

Intel’s offering aims to exploit one of the TV industry’s major issues: the reliability, or lack thereof, of Nielsen ratings data on audiences. Nielsen has long been the dominant provider of TV ratings, but the accuracy of its data has come under attack by some network programmers, who argue that its polling system of 50,000 homes is antiquated for the digital age.

For its part, Intel claims that the new interactive features in its set-top box would add greater value to TV advertising and help offset reduced revenue from licensing fees for network owners.

“They’ve told us the technology is going to be so much more interactive with ads that you can make more money. But it’s just a little unproven,” said one executive who has been involved in the talks.

An Intel representative declined to comment for this story.

Chip features making it easier for Hollywood studios to protect content streamed to computers, as well as tools for detecting faces and analyzing audiences, are examples of current proprietary technology that Intel would like to see widely adopted.

BEYOND PCs

While Intel’s processors power 80 percent of the world’s PCs, its chips have not achieved a significant presence in smartphones, tablets and other interconnected devices. Intel executives say they are eager to make sure its semiconductors play major roles in new markets with big growth potential.

According to a company source, ensuring that its chips become prevalent in home entertainment devices would be the driving reason behind any Internet TV service it launches.

Comcast, for instance, recently announced the gradual rollout of an Intel-based set-top box that customers can control with their smarpthones. Called “X1,” the platform will rely on data centers packed with high-end servers — which typically also use Intel chips.

Intel last year wound down a push to make chips specifically for “smart” TVs after Google TV, which it had backed, failed to make a major splash with consumers.

At the same time, it formed the Intel Media business group with a mandate of promoting digital content on Intel-based platforms.

According to sources, Intel is proposing to media companies a service could include both a bundle of TV channels similar to a normal cable package and an on-demand component.

ENLISTING HEAVYWEIGHTS

Intel is intent on launching its video service before the end of the year, sources said. Original plans called for it to be launched by November, said one of the sources, but that deadline likely will not be met.

The biggest problem Intel faces is its inability to reach deals with major content providers, which are reluctant to license their networks and TV shows at rates that could undercut their larger established cable and satellite partners.

Intel wants to keep its costs down by licensing smaller packages of TV networks instead of replicating the basic cable TV bundle of more than 100 channels. But network owners won’t agree to smaller bundles without being paid a premium for the channels they choose to license.

“Why would I want you to take subscribers away from another distributor at a lower price?,” asked the same media executive who spoke with Reuters on condition of anonymity.

To change that mindset, Intel has assembled a team of television industry veterans well-schooled in negotiating distribution deals. Leading the group as head of Intel Media is Erik Huggers, who worked on media at Microsoft before going to the BBC. Huggers enlisted as an adviser Garth Ancier, who most recently served as president for BBC Worldwide America and before that worked at NBC, FOX, and Disney.

In addition to Huggers and Ancier, sources said, two other names prominent in TV circles have emerged as consultants for Intel: entertainment lawyer Ken Ziffren and former MTV executive Nicole Browning.

Browning, who previously negotiated on the other side of the table for MTV, has been handling some of the talks with partners, sources said.

Ziffren built his reputation representing Hollywood talent – he was instrumental in negotiating the deal that returned the “Tonight Show” to Jay Leno. Lesser known is his firm’s work negotiating deals for DirecTV’s video-on-demand service and carriage agreements for pay-TV network Starz.

But even that quartet of executives may not be enough to resolve an intractable problem, which is that content companies have little incentive to offer their channels to Intel at a discount and Intel is loathe to pay a premium.

“They’d love a better deal but they won’t get one,” said Needham & Co analyst Laura Martin of Intel. “The industry has always worked on volume discounts.”

Underscoring the difficulty insurgent tech companies face in securing content, Microsoft in January indefinitely postponed plans for its own online TV subscription service after deciding that licensing costs were too high, according to people familiar with those discussions.

And therein lies that dilemma that Intel and other insurgent over-the-top providers must tackle before their big plans can be realized.

Intel eyes Internet-based TV service: WSJ [Reuters, March 12, 2012]

Chipmaker Intel Corp is developing an Internet-based TV service for consumers and has been promoting it with media companies, the Wall Street Journal said, citing people familiar with the effort.

The world’s top chipmaker plans to create a “virtual cable operator” that would offer media companies’ TV channels in a bundle over the Internet, the WSJ said.

An Intel spokeswoman declined to comment on the story.

The product could use an Intel set-top box and Intel’s name, and the chipmaker has told its potential partners it wants to start the service before the end of the year, the WSJ said.

In October, Intel wound down its efforts to make chips for digital “smart” TVs, although it continues to make chips for set-top boxes.

At the same time, it formed the Intel Media business group, headed by former BBC executive Erik Huggers, aimed at promoting digital content on Intel-based platforms.

Intel winds down smart TV business [Digital TV Europe, Oct 13, 2011]

Intel has ditched its move into internet connected TVs after closing its Digital Home Group.

The company will continue to supply chips to gateway devices and set-top boxes but will wind down its Digital Home business. Digital Home Group staff will be relocated to focus on netbooks, smartphones and tablet devices.

Erik Huggers, a high profile appointment from BBC Future Media in January, will remain at Intel where he will lead a new group called Intel Media.

Intel’s decision is reportedly due to a lack of demand for its chipsets for internet-enabled flatscreen TVs. Intel’s Atom CE4100 chips currently are used to power to a variety of devices including  Sony’s Google TVs and the Logitech Revue Google TV-enabled set-top, but also the D-Link Boxee box as well as French ISP Free’s Freebox Révolution and Liberty Global’s Samsung-built Horizon set-tops.

Intel Looks Beyond Smartphones, Tablets & TVs [Information Express blog, Oct 19, 2011]

– Appoints Huggers to Found & Run New Intel Media Group
– Digital Home Group Merged into Netbook & Tablet Group  

Intel, under the hands-on direction and guidance of CEO Paul Otellini, wants to look beyond smartphones, tablets, TVs and consumer PCs, way beyond, so it can plot a course for its future, not just for the near term. To that end, Intel has taken two giant steps.  

It has created a new group called Intel Media that Erik Huggers will head. Huggers’ Digital Home Group, except for smart TVs, will be merged into the existing Netbooks and Tablets Group that Doug Davis will continue to operate. The smart TV operation is being closed down except for existing customers.

…

Intel sees the TV market as currently being a “footage per dollar” one. Consumers set a budget for what they can spend and then try to buy as big of a screen as possible for less than their budget. Evidence of that is 60-inch TVs that are going for $1,200 and a 42-inch LED smart TV from LG, this year’s model, being sold by Amazon for $650 including delivery to the home and the chip making giant Broadcom exiting the market a few weeks ago. 

The economic downturn and increased competition has put brand name makers of TV sets under tremendous pricing pressure. Sony, once the king of high-end TV sets, has lost billions of dollars in the TV market and says it expects to lose millions more. Sony, Toshiba and Hitachi are working together with a government-backed fund to spin off and merge their LCD businesses. (Why not? The US did almost the same for US car makers with loans and advances for “green” cars.) 

No one has cracked the smart TV platform yet and that’s why so many have popped up. In some respects Intel is doing what the smart TV industry will have to do at some point: stop and ask where we are going. It’s like the early days of MP3 players, Huggers said, when there were lots of MP3 players but no one was buying. Suddenly Apple entered the market with the iPod and the iTunes store and player, perfectly synched, and consumers started buying millions of its players and songs from iTunes.  

Perhaps the straw that will break the camel’s back in TV pricing is that two major new factories are being built in China to make displays, according to Intel. The golden age for buying TV sets will continue but goodness help you if you’re trying to make them for a profit. 

As long as the pricing pressure on TVs continues, TV set makers don’t want to add any feature they don’t have to — although it’s widely acknowledged that the tipping point for smart TVs has been passed. All TV sets will be smart, just like they all now have color. 

There’s another reason for Intel to meld IPTVs and tablets. As Apple has clearly shown, successful CE makers will have one silicon and one ecosystem. Apple, for example, is not going to use a different silicon family or ecosystem for apps and online store than the ones it uses for iPhones and iPads if it were to launch a line of TV sets. 

Let Us Praise the Dead Digital Home Group

The Digital Home Group had some notable successes handling the CE versions of the Atom processor:

– The Boxee Box
– The failed (through no fault of Intel) Google TV that Sony andLogitech made
– The IPTV STB Comcast ordered from Pace
– The snazzy Samsung STB that Liberty Global’s UPC ordered 

The follow up on those and others like them will be handled in Intel’s Netbook and Tablet Group. 

Intel sees a major opportunity in IPTV boxes — media processors and the gateway/home network businesses. It sees the synergy that’s emerging between tablets and smart TVs plus other smart consumer devices. 

The move to all-IP infrastructures by the cablecos and the links between TV sets and tablets were loudly obvious at The Cable Show in Chicago.

The world’s telcos started with IP for their TV technology and the cablecos are rushing to catch up. The race to integrate tablets and TVs takes two forms:  

– The use of the tablet as a second viewing device — a mobile TV within the home. 
– The tablet and smartphone becomes a companion screen to what’s on the TV, one where viewers can chat with friends and the show’s stars about what they’re watching. It goes beyond allowing viewers to “click” on advertising links to learn more about a product. Ask any parent of teenagers about it.  

Intel spokesman Claudine Mangano said, “We believe the future of TV is in IP delivery and multi-screen usages and are aligning our focus to these areas, and with other top corporate imperatives that include ultrabooks, smartphones and tablets.” She made it clear that Intel is not abandoning its existing smart TV customers.  

Intel Media Looks Way Ahead

Intel Media is being founded to look beyond the current generation of smartphones, tablets, TVs, PCs and IPTV. It is mandated to answer, “What technology will be needed as the digital media industry progresses?”  

Intel is not clear publicly on what Intel Media’s mandate is but in Erik Huggers it has put one of the industry’s leading digital media executives in charge. Huggers is not talking about it very much except to say Intel is very, very serious and ambitious in digital media and that he is super-excited by Otellini’s challenge. 

Huggers was previously at the BBC as director of the its future media and technology division until Intel hired him earlier this year. Before that he worked for Microsoft in various digital media projects. 

With impossible hurdles in front of him, Huggers led the technology dinosaur BBC into the digital media era. He oversaw the launch of the BBC’s iPlayer for catch up TV. Launched in 2007, it was years ahead of its time and still ahead of anything in the States. 

He nearly led the BBC to the forefront in smart TV platforms with Project Canvass, now called YouView. It is an attempt to develop a standard smart TV platform that lets developers easily add apps and CE makers to easily add to their gear. Unfortunately the BBC Trust, which runs the BBC, decided to play politics instead of getting out of the way.

It forced the BBC to bring in seven other companies such as BT, each with a different opinion as to what should be done, to help develop and deploy YouView. Know the story about the committee and the camel? Well, that’s what happened. YouView is still not on the market and the rival HbbTV standard is becoming dominant on continental Europe. 

A common smart TV platform would have benefitted consumers and CE makers just as Windows did for PC makers and consumers. Instead the world is awash in smart TV platforms — all incompatible and inconsistent in their user interface — and with some companies changing platforms from year-to-year. 

The closest Huggers comes to revealing anything about Intel Media is to say, “For Intel to be successful in digital media, it must have the best access to digital content.” He then says that Amazon is showing the way with its Kindle Fire.  

Intel wants Intel Media to sail out into the future of digital media and see what’s there. It has selected the best man for that task. Perhaps Huggers will again be called “director of future media and technology” as he was at the BBC.

Innovation in Media [Erik Huggers on Intel Capital, Global Summit 2011, Nov 15, 2011]

Huggers joins CMI supervisory board [CMI press release, Oct 27, 2011]

Consolidated Media Industries, the innovative European digital media group, is delighted to announce that Erik Huggers is joining its Supervisory Board. The Intel Executive and former BBC Future Media & Technology director, has an extensive international track record at the forefront of digital media innovation.

“Erik Huggers really understands how innovative technology is changing the behaviour of media consumers worldwide,” said CMI President and CEO Bart-Jan van Genderen. “He will play a key role in the realization of CMI’s international ambitions. Erik’s experience and vision on global media, innovative consumer services and digital content creation are of tremendous value to us. We’re delighted such a talented person is joining our Board to share his insights and expertise.”

“CMI is one of the most digitally savvy media enterprises in Europe” said Erik Huggers, Corporate Vice President of Intel Media. “I feel privileged to join this team and look forward to working closely with the other Board members during this important phase of CMI’s growth.”

Erik Huggers Career

Erik Huggers is currently Corporate Vice President and General Manager of Intel Media and a member of Intel’s Management Committee. Erik’s mission is to establish Intel as a global leader in consumer software and digital media services.

Prior to his position at Intel, Huggers has worked with Endemol Entertainment as Director of Business Development for its interactive division. He then joined Microsoft, where he led the global business development for Windows Media Technologies.

He joined the BBC in 2007 and became a member of the BBC’s Executive Board. He was appointed Director of BBC Future Media & Technology and during his tenure was responsible for the successful roll-out of BBC Online, BBC iPlayer, Mobile and Red Button services. All these technologies were designed to help audiences enjoy easy access to BBC content, on demand and on any device. Huggers also held responsibility for managing the Broadcast and Enterprise Technology group, BBC Archives, as well as leading the Research & Development department.

Intel Names BBC Executive to Lead Digital Home Effort [Intel Newsroom post, Jan 18, 2011]

Intel Corporation today announced that Erik Huggers will serve as corporate vice president and general manager of the company’s Digital Home Group and become a member of Intel’s Management Committee. Huggers is director of the BBC’s Future Media & Technology division and serves as a member of the BBC’s Executive Board. He replaces interim general manager Brad Daniels.

“Erik Huggers’ proven track record of managing a variety of digital media businesses will be an extraordinary asset to Intel’s digital home initiative,” said Intel President and CEO Paul Otellini. “Erik’s background and vision for delivering new platforms, interactive content and services to consumers are an outstanding fit for Intel, and I am thrilled to welcome such a talented person to drive this key strategic business for Intel. We look forward to him joining our team.”

Huggers joined the BBC in 2007 and is responsible for delivering BBC content over the Internet, interactive TV and mobile, helping audiences enjoy programming using a wide variety of devices from any location. He is also responsible for managing the BBC’s Broadcast and Enterprise Technology Group and BBC Archives, as well as leading the BBC’s Research and Development activities.

Huggers has long been at the forefront of digital media innovation. Prior to joining the BBC, he was with Microsoft where he led the global business development for Windows Media Technologies. Before joining Microsoft, Huggers worked with Endemol Entertainment as director of business development for its interactive division.

“I look forward to joining one of the leading technology companies in the world,” said Huggers. “This is a tremendous opportunity to build a new business for silicon, software and services to unlock the potential of high-quality connected media experiences in the living room.”

Intellect Consumer Electronics Conference 2011 – Keynote presentation by Intel’s Eric Huggers [IntellectTechnology YouTube channel, Aug 2, 2011]

One on One with Erik Huggers [Intel Free Press, Aug 18, 2011]

Former BBC executive heading up Intel’s consumer electronics efforts on management, smart TV and life.

When Intel went looking for a new leader to replace departing executive Eric Kim as head of the Digital Home Group, they went to someone who knew very little about silicon.

But through his work at the British Broadcasting Corporation (BBC) as director of the Future Media & Technology organization, and Microsoft, where he drove a wide variety of digital media initiatives, Erik Huggers is no stranger to digital media innovation.

In the following Q&A, Huggers, a native of The Netherlands, talks about why he joined Intel, how the company needs to get into the heads of digitally savvy teenagers, and why his new user experience design team is in London is a key asset.

Since joining Intel 4 months ago, have you ever asked yourself, “What have I gotten myself into here?”

On day one. I’ll tell you the honest truth. Let me first say, I do not regret joining Intel for a second. I’ve been overwhelmed by the warm reception I’ve gotten.

When I was at the BBC as an executive board member in a media and entertainment company, you get a certain set of privileges when it comes to office spaces.

I had a proper executive suite on the top of the building, lots of windows, a living room set up in my office, projectors, televisions. That’s how it’s done for those companies for the last 90 years.

When I arrived here on day one and they showed me to my cube on floor five [in the Robert Noyce Building of Intel’s Santa Clara, Calif. headquarters], I literally thought, what have I done?

I’ll adapt, don’t get me wrong. But the delta on day one between the executive suite and my new cube (laughs). I had a bit of detox to go through, I think.

So when I moved [in 2007] from Microsoft to the BBC I had people in front of BBC Television Centre dressed up in these chemical nuclear suits picketing against my appointment.

At Intel, I’ve only been warmly welcomed by colleagues and folks around the business. And so far, it’s been an amazing 4 months.

During your short tenure at Intel, have you seen areas where we can improve?

As someone who’s been here for 4 months, I don’t claim to have tons of wisdom. I was surprised by the number of steering groups and meetings that happened. Some of these meetings are like professional debating societies, where there are armies of Intel people talking about incredible minutia. I would’ve thought we would be fleeter of foot.

In these meetings, I am surprised by the number of people doing email. If you don’t want to be in a meeting, get out. Don’t do mail. Close your laptop.

One of the things that I really learned being in the media industry directly and indirectly for 15, 20 years now, is that what those industries do really well is put the audience at the heart of everything they do. I don’t think that’s what we do today.

What we talk about is valid stuff like the next process node, or putting more transistors on a die, or can we do more gigahertz or flips or flops or whatever we measure, and we get really excited — for good reasons. But what’s more important is: What does this stuff enable for the consumer?

And I’m not talking about the people who buy our technologies and build end-products. I mean the person who buys the end-product. How is what we build valuable to a 15-year-old who’s completely connected?

We need that hardcore technical super-engineering capability that we have in spades here. But we also need the audience insight.

Finally, I’m a big supporter of our investments in software development, and I think that’s absolutely critical. We need to attract the best possible engineering talent in order to take a bit more control over our own destiny as a company.

Can you talk more about user experience?

Everyone talks about user experience at Intel these days. I’ve come to the conclusion that most people don’t know what they’re talking about.

We have great talent inside Intel, don’t get me wrong. Genevieve Bell and the team [Interaction and Experience Research (IXR) group in Intel Labs] clearly get it.

We need to bring top talent that can execute on that user experience and design piece into Intel so that starts to influence our culture, our way of thinking, how we think about products, the audience. So, we just hired a user experience design crew in London.

Why London?

Here in the Silicon Valley, when it comes to those sorts of skills, it’s impossible for us to — well not impossible — but it’s very difficult for us to compete, because you’re competing with Facebook, Apple, Google. We don’t have that same sort of competitive situation in the UK right now, and traditionally the UK has been a hub for design talent.

Plus, the people that I’ve been able to attract I know very well, because they worked in my organization. These are the guys that have designed industry award-winning services across television, telephone, tablets, PCs.

I think bringing that expertise into Intel will influence the direction of travel for whatever we do in next-generation silicon, next-generation software, next-generation services, so that we start with that audience in mind, and then we work our way back.

So in 2 years, where do you see smart TVs and Intel’s play?

My hope is that our play in smart TV is going to be more than just silicon. Silicon is absolutely a critical element to get right, and I would argue that the silicon engineering team has performed miracles.

Just having that platform in your living room means nothing if there’s no content, no services, no applications, if there isn’t a vibrant ecosystem of third party ISVs and media companies who target that platform as a means of reaching the consumer and building a viable business.

So is DHG only about smart TV?

I think it’s important to realize that we have some pretty interesting early momentum. Getting Comcast to work with us is a huge milestone. Getting other service providers to take us seriously, like Free in France, a wonderful success story, and Sony on Google TV. As Intel, we’re going beyond the PC. We have early glimpses of what that world could look like in DHG. We have shipping products, we have customers.

My entire career has been dedicated to digital media. And consumers do not care whether it’s consumed on a TV, a PC, a phone or a tablet. It doesn’t matter.

Consumers today are hungry for taking control over their digital media consumption.

And so to me, DHG is not just about television. DHG can potentially help the rest of Intel with our digital media ambitions.

How would people at the BBC and Microsoft describe your management style?

In some cases, if a project is going completely off the rails, maybe the management style is slightly more autocratic and directive and hands-on and micromanaging. In other cases, you have a great leadership team in place and they’re ticking along quite well, it’s much more coaching and supporting and helping resolve blocking issues. I don’t think there’s such a thing as a single style.

Dutch people are very direct, and they call it as they see it, and I think that’s very important.

Is there some area of management that you’ve had to improve upon?

No one’s perfect. Everyone has opportunities to improve their day to day work, the way they interact with others. I think everyone always has to work on communication style and over-communicating, because just because you think something doesn’t mean that everyone automatically understands what you’re saying.

What I’ve found is that when I get bored of the message, that’s when it really starts to ring through with other people.

Who was your best manager?

Two individuals that I have in mind were both entrepreneurial, self-starters, not afraid of managing up or managing down.

They also were able to create teamwork, group spirit, and didn’t necessarily pit their best people against each other. A bit of creative tension is good, but animosity and negativity, that’s simply not good.

What made you decide to come to Intel?

[President and CEO] Paul Otellini convinced me that he was absolutely, completely, and utterly dead serious about moving Intel beyond the PC.

The PC was going to remain critically important as were servers, but he was dead-set on making sure that we as an organization were going to be successful in phones, in tablets, in television, and whatever other form or factors comes along. We’re going to move from a PC company to be a compute company.

How do you balance work with life?

I’m passionate about what I do. This is not for me about a paycheck. I want to be part of an organization and contribute to an organization and lead an organization that has the ambition to change the world, change the industry.

When you’re mission-driven like that, putting in the long hours doesn’t matter. You’re passionate about it, you love what you do, you enjoy it, that’s what gets you out of bed every day. And so, work/life balance is tough, but I’m fortunate that I’ve got a brilliant wife who’s very understanding and forgiving.

How do you relieve stress?

What I do is I talk all day with customers, with partners, with employees, with colleagues. To relieve some stress, I like to be quiet. Maybe simple stuff like watch a movie or go for a walk.

What are your hobbies, besides traveling?

I’m passionate about technology, keeping up-to-speed with the latest and greatest of what’s happening on the web, what’s happening with consumer electronics. I get the latest widgets and gizmos and try them out.

My wife is a Formula 1 fan, and because of her, I get kind of forced into it.

Media City Forum : Erik Huggers Presentation [SalfordUniversity YouTube channel, March 5, 2010]