Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Intel Corporation (INTC) Television Could Become a Reality

Intel Corporation (NASDAQ:INTC) plans to come up with a new service that allows for web streaming of cable TV content. However, The New York Times illustrates that Intel could be in some trouble:

As Intel tries something audacious — the creation of a virtual cable service that would sell a bundle of television channels to subscribers over the Internet — it is running up against a multibillion-dollar barricade. That barricade is guarded by Time Warner Cable Inc (NYSE:TWC) and other cable and satellite distributors, which are trying to make it difficult — if not impossible — for Intel to go through with its plan. The distributors are using a variety of methods to pressure the owners of cable channels, with whom they have lucrative long-term contracts, not to sign contracts with upstarts like Intel, that way preserving the status quo.

Intel Corporation (NASDAQ:INTC)

Intel Corporation (NASDAQ:INTC) could be under pressure due to anti-competitive practices employed by these firms, but with Intel having $18.16 billion in cash and cash equivalents, I find it highly plausible for the company to be able to buy enough content in order to become competitive with companies like Netflix, Inc. (NASDAQ:NFLX) and, Inc. (NASDAQ:AMZN). The problem is that Intel is being thwarted by industry giants and is forced to play by their rules. The company is experiencing headwinds in computer demand and in order to offset this, it is launching Intel TV by the end of the year.

Will it even work?

Just because Intel Corporation (NASDAQ:INTC) is able to divert the content from channel owners to the internet doesn’t mean it will work. It would be difficult to imagine how it would scale in the beginning stages. The company would need the support of its highest level executives in order to keep this operation going as Intel would have a very high break-even point for a project of this scale.

Plus, everyone recognizes Intel Corporation (NASDAQ:INTC) as a semiconductor company, and the thought of tuning into “Intel TV’ is sort of absurd now. But then again, the company has some of the most creative ad-men in the industry, so I am sure they could come up with something that could sway public sentiment in a positive way. The problem comes from a mix of competition and anti-competitive practices.

Companies like Time Warner Cable Inc (NYSE:TWC) may not be willing to hand over content to channel owners, so channel owners cannot stream via internet. There’s also a lot of legal jargon and anti-competitive clauses getting in the way. This is troublesome because if everything is based on a broadband connection, then cable providers like CenturyLink, Inc. (NYSE:CTL), Comcast Corporation (NASDAQ:CMCSA), and Cox will suffer terribly. The gatekeepers will keep Intel Corporation (NASDAQ:INTC) away as they have a financial interest in cable’s success.

These companies, when combined, have enormous financial resources along with non-financial resources to keep Intel away from this business. This makes it difficult for investors to buy Intel stock on the hopes that Intel TV becomes Intel’s next multi-billion dollar business.

Netflix wins with everyone

Investors would generate greater returns when investing into Netflix, Inc. (NASDAQ:NFLX). Unlike Intel Corporation (NASDAQ:INTC), Netflix was pretty smart about how it pursued its business strategy.

Start with pebbles that cause ripples, then eventually start throwing rocks that cause waves. The company has a winning strategy that compliments the pre-existing eco-system. When content is too expensive, the company develops some of its own in-house programming, which to the most part has been effective.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.