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Intel Corporation (INTC), Google Inc (GOOG), Time Warner Inc (TWX) – Profiting From the Battle for the Future of Television: Part Four

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Intel Corporation (NASDAQ:INTC)The way that you watch television is in the midst of a sea change that will forever impact visual entertainment. Consumers are embracing new technologies as fast as they can be introduced, and the proverbial cord is being cut. The transition has allowed for the emergence of four different segments: cable and satellite, streaming video, TV enhancement, and advanced options.

In Part 1 of this series, I considered the traditional players and how they are looking in the shifting landscape. In Part 2, I featured the streaming video players with an eye toward how they look ahead as more shifts occur. In Part 3, I explored the TV enhancers — those companies that are working with traditional providers to enrich the viewing experience. Below, I will look at what I call advanced options — those alternatives that are looking to totally reinvent the way we think about television.

Advanced options
Intel Corporation (NASDAQ:INTC)
 — Intel Corporation (NASDAQ:INTC) is in the process of trying to bring Internet TV to the market. The company has promised to release a new, live-TV, “over the top” Internet service by the end of the year. The service, which is expected to be called OnCue, will deliver a full complement of live programming and on-demand content to users across a broadband connection. Unlike the TV enhancers described in Part 3, Intel Corporation (NASDAQ:INTC)’s OnCue service will not require a subscription to any other service provider.

As you can imagine, there are significant barriers to entry for a new player entering the market, especially one that will directly challenge the old guard. Last June, Reuters reported that Intel Corporation (NASDAQ:INTC) had begun negotiations with various content providers, offering in some cases to pay as much as a 75% premium in order to gain access to content. Furthermore, many of the contracts that exist between the production companies and cable and satellite providers either impose stiff penalties for going to Internet-based providers or even contain exclusivity provisions. If this seems anti-competitive, which I believe it is, you’ll be happy to know that the Justice Department has begun to look at possible antitrust violations.

Despite these challenges, if Intel Corporation (NASDAQ:INTC) can establish a solid base in the market, it should become a major disruptor. This is exactly the type of development the company needs, given the slowing of the PC market. You should watch for OnCue this year, and follow its acceptance as a strong indicator of Intel Corporation (NASDAQ:INTC)’s future health.

Google Inc (NASDAQ:GOOG)  — While Google Inc (NASDAQ:GOOG) has not quite perfected its model yet, at an event in May, it declared that it has already crushed cable with its unique model for bringing entertainment to people. YouTube content continues to expand, having recently hit 1 billion unique visitors per month. During the company’s appearance at “NewFronts” — a digital media trade show focused on advertising — Google Inc (NASDAQ:GOOG) focused on its ability to reach users, rather than on its expanding content offerings. With the rollout of Chromecast, a $35 device that will allow you to get YouTube content directly on your TV across a broadband connection, Google Inc (NASDAQ:GOOG) is taking a different approach than Intel, but ending up in a similar place. Given the popularity of YouTube, if media companies begin to offer increased amounts of content on YouTube, Google Inc (NASDAQ:GOOG) may never look back.

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