Media streaming is a big business: Netflix, Hulu, Amazon and even Aereo have built an entire, massive industry around the idea. As these companies see success, other, large companies will try to get into the game. Verizon recently backed RedBox's entry into the market, but they are not alone. Intel is in the process of joining the market with a set-top box, but not in the same way that Boxee or Roku have; instead Intel will provide the hardware and service together.
As part of this move, Intel is working to secure streaming rights to content from companies like Disney, News Corp and Viacom. Because the service has not launched and content providers are concerned about the possible success of yet another streaming service on a dedicated piece of hardware, several companies are reportedly charging Intel up to a 75% premium per subscriber.
Traditionally content providers charge streaming services a set fee per subscriber per month. Disney is, of course, the highest fee at $5.15 per subscriber last year. With premiums up to 75% over market value, that would be over $9 per subscriber per month just for Disney's content. How would it be possible for Intel to make money and stay in this business?
Obviously they will need to prove their value to get better prices, but until then they will probably have to eat the cost. Lucky for Intel they have a lot of cash. Hopefully for Intel this service will not go the way Google TV has, with no one seeming to care.
Be the first to comment!