Broadband Cable Association of Pennsylvania


July 30, 2013

To understand how much television could soon change, it helps to visit an Intel Corp. INTC -0.09% division here that runs like a startup.

Erik Huggers, a Dutch-born former British Broadcasting Corp. executive, has assembled a 350-person team with talents beyond computer chips-programmers, industrial designers, artists and experts in fields like video encoding. Working in bright, newsroom-style offices that differ from standard Intel cubicles, they're creating an Internet-based service that doesn't only serve up on-demand programs but overhauls live TV as well.

Intel's plans include a server farm to record every piece of programming aired-local, national and international-and store it for at least three days in the "cloud." With an Intel-designed set-top box, people won't have to own DVRs or even plan to record programs.

Switch on the TV in the middle of any show, and a viewer can simply go back to the beginning. "This is live TV-but you can rewind it," Mr. Huggers says.

Intel is just one entry in the computer industry's growing land grab for the living room, one likely to bring voice activation, restyled remotes, new on-screen interfaces and other major changes in the way people interact with TVs. Other tech giants pushing TV advances include Apple Inc., AAPL +1.52% Microsoft Corp., MSFT -0.25% Sony Corp. and Google Inc., which last week announced a device called Chromecast that expands a category of devices that wirelessly transfer content from mobile devices to TVs. Google and Sony have also been working on Internet-based video delivery services, people familiar with the matter have said.

Computer industry players have been pushing new TV visions for 20 years, with decidedly mixed results. Cable and satellite TV providers have strong positions, with big players like Comcast Corp. CMCSA -0.76% preparing major technology upgrades of their own.

Negotiations with media companies for content rights could delay new services and limit some features, though Intel vows to enter some markets by the end of the year.

Yet there is a growing consensus that underlying technologies are evolving to the point that major changes in the TV experience are all but inevitable, whether delivered by new entrants or incumbents.

"I've never seen as much innovation in television as there is right now," says Ulf Ewaldsson, chief technology officer at Swedish telecom-equipment giant Ericsson, which plans to step up its own TV efforts.

Propelling the activity are changes that have made the Internet a more viable delivery medium, including the growing proportion of customers with broadband service that can accommodate high-quality video signals.

Many customers now have Internet connections in their living rooms through various devices, used largely to stream or download video programs from a variety of sources, including Netflix Inc. NFLX -0.55% Consumers also use tablets and smartphones to view movies and TV shows as well as to serve as companions for action on the big screen.

Despite the developments, much is missing from Internet-based services. Popular programming, including live sports and news, is often limited to conventional carriers by licensing restrictions.

When large video libraries are available, finding specific programs can be cumbersome-especially with conventional remotes that weren't designed for entering text. Most TV services also lag the Web and mobile apps in helping discover new content.

"The phone, the laptop and the tablet have advanced so dramatically," says Tom Rogers, chief executive of TiVo Inc., the DVR pioneer. "Television has been drastically left behind."

Tech companies trying to change that include Apple. The Silicon Valley trendsetter has since 2007 sold an add-on box called Apple TV for streaming content, but has been mum about new TV offerings. The company has tested designs for its own televisions, executives at Apple suppliers have said.

Apple has explored a number of new features for such a product, people familiar with the situation have said, including integrating DVR storage and its iCloud Internet syncing and data-storage service, and voice-interaction capabilities-which Apple's Siri brought to its mobile devices.

Microsoft is also promoting voice recognition as it positions its videogame consoles and companion Kinect controller for a broad role in home entertainment. The company's Xbox One, due out this fall, allows customers to turn on multiple living-room devices by simply saying "Xbox On," the company says. They can also navigate to programs by speaking commands such as "Go to ESPN," or "I want to watch Breaking Bad." Some Xbox apps can also be used while watching television; a Skype video chat or fantasy sports scores, for example, can appear on TVs alongside a game.

Microsoft has experimented in other areas-including offering an Apple TV-like set-top box without videogame capability, building Xbox circuitry into TVs and adding DVR capability to Xbox models, people familiar with its prototypes have said.

Sony, which hasn't commented on plans for a content service, has been less vocal about technologies like voice interaction. But it has been active in other areas to improve the TV experience.

The Japanese company, for example, has developed a tablet and smartphone app called Sony TV Sideview that augments TV program guides. It supplies information on topics such as shows and actors-while also letting people incorporate searches across Netflix, YouTube and, of course, Sony's own video and music services.

One basic challenge is simply managing the growing array of content options, including movies from Netflix, Web-originated fare like YouTube, conventional live TV and video consumers have recorded. TiVo has been particularly active in offering interface software that searches through the varied offerings and works on mobile devices as well as set-top boxes.

Comcast is promising similar search advances as well as personalization features in X2, the cable giant's name for what it calls a new entertainment operating system.

That software, which Comcast plans to begin rolling out by the end of the year, is designed to recommend content currently on live TV based on tracking a customer's past viewing habits as well as topics trending on Twitter and Facebook. Comcast says X2's interface can work on TVs, PCs and mobile devices-allowing users to manage their options from multiple screens-and supports voice searching capability.

Intel's Mr. Huggers, who spearheaded development of a popular BBC content app called iPlayer, sees advantages in starting from scratch. For one thing, his developers can exploit Intel technologies such as new chips for servers and set-top boxes, configuring them to call up programs and change channels noticeably faster that other living-room hardware.

One feature Intel has decided not to pursue for now is a camera equipped with facial recognition software to help personalize offerings for each user in a household. Mr. Huggers says the technology didn't work well enough in the low lighting common when watching TV and raised privacy questions.

Intel is testing its technology with 2,500 Intel employees in California, Oregon and Arizona. Documents that surfaced this month suggest Intel may call the service OnCue, though the company has declined to comment on that possibility.

Whatever the name, Intel and others planning to create new Internet-based services are widely expected to face tough sledding in negotiating rights for video content. Such companies are in a position to demand lucrative terms, says James McQuivey, an analyst who tracks TV technology for Forrester Research.

But he doesn't expect licensing hurdles to stop long-term trends that will weaken the influence of TV incumbents. "The business is very quickly shifting away from the people that have controlled it forever," Mr. McQuivey says. - Wall Street Journal