The first glaring issue is licensing. No streaming service can succeed without content, and even with pockets as deep as Intel’s, acquiring enough of it will not be easy. The company has made its general plans clear, but conspicuously made no mention of what content it expects to have at launch. Content is quickly becoming a point of contention for incumbents like Netflix. Fending off the likes of Amazon.com, Inc. (NASDAQ:AMZN) is already straining content; adding another firm to the mix will do nothing but push the price of content higher. In addition to higher prices, Netflix and others have been vying for exclusive content deals, reducing potential content available to Intel’s fledgling service. Intel may be able to circumvent content issues by adopting bundling similar to cable, but that would weaken the service in the eyes of those looking to cut the cord.
Two other major issues are technological constraints and consumer product expertise. Intel has a tremendous track record with chip fabrication, but its consumer facing products have been few and far between. It remains to be seen whether Intel can pull off a major design coup where Apple and Google have not. Compounding that issue is the fact that Intel’s service will be forced to rely on the bandwidth of other companies. Even if Intel manages to put together a killer service, it has to rely on other companies to deliver the most important part, the content. Netflix has had to deal with the same issue, but Intel’s platform is more ambitious and likely to suffer more under infrastructure constraints.
In the end, even if Intel manages to successfully navigate the issues and build a viable service, it seems unlikely it will become a major profit center. Intel may be able to leverage success into a wider consumer footprint, but it may find its effort and resources better spent on mobile.
The article Intel Moving Into Your Living Room: Bad Decision? originally appeared on Fool.com and is written by Chris Moore.
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