SAN FRANCISCO Intel Corp's media arm is opening offices in New York and Los Angeles as the company pushes ahead with an Internet television service that it plans to launch later this year, an Intel spokesman said on Friday.
Setting up shop in Los Angeles' Santa Monica and New York's Nolita brings Intel closer to the major TV networks and production studios that the world's biggest chipmaker must strike deals with to gather content for its live and on-demand service, Intel spokesman Jon Carvill said.
Opening the offices is a sign that Intel is committed to moving ahead with the venture even though progress making deals has been slow. Some industry insiders have expressed doubts about Intel's ability to successfully create a business to challenge traditional cable operators.
"It suggests that there's an ongoing level of interest, maybe an incremental positive to their commitment," said Cody Acree, an analyst at Williams Financial Group. "They have to continue down this path or there's no hope of being successful."
Intel plans to introduce the TV service, to be delivered through the Internet and a set-top box, this year in a phased rollout in regional markets, Carvill said.
In July, Intel Media hired Moe Khosravy, a cloud-computing expert who previously worked at Microsoft Corp and VMWare Inc, as head of software and user experiences. Intel has about 375 people working on the TV business, most of them based at Intel's headquarters in Santa Clara, California.
Doubts about Intel's commitment to the venture emerged in June after newly appointed Chief Executive Brian Krzanich warned he was taking a cautious approach to television, far from the company's core business of chip manufacturing.
Some content providers have agreed with Intel about how their content would be distributed, but as of June the chipmaker had yet to sign any deals despite offering to pay sizeable premiums over traditional cable rates.
Carvill declined to comment on Intel's negotiations.
Intel is not the only technology company trying to revolutionize the TV industry, where Comcast Corp, Time Warner Cable Inc and DirecTV are players and have much to lose from potential new entrants. Apple Inc, Google Inc and Amazon.com Inc are believed to be working on their own new TV services and products.
Media companies typically give better prices to operators with more viewers, such as large cable companies, and charge higher prices to smaller or newer entrants. Since Intel's TV service has yet to start, it can expect to pay a premium.
While Intel has not said how much it plans to charge for its TV service, Intel Media head Erik Huggers has billed it as a premium product, with small bundles of channels and an attractive user interface rather than as a cut-rate option for consumers hoping to save money by canceling their cable subscriptions.
(Reporting by Noel Randewich; Editing by Kenneth Barry)