Intel may pay 75% premium on content for its digital TV device

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Intel is willing to pay big money to get content onto its upcoming TV set top box. The company, according to Reuters, is offering to pay a 75 percent premium to content providers.

The chip maker is planning on going deep into digital media by releasing a set top box that will stream television and movie content later this year. One of the biggest hurdle for any company competing in the digital TV industry is striking deals with content providers such as Disney, Time Warner, and Viacom.

Intel’s is reportedly courting CBS, News Corp, and Viacom for content deals, according to Reuters’ sources who remain anonymous, but has yet to actually strike one.

Because Intel’s product is not launched yet, the company will be forced to pay a premium for this content because, simply, the content providers don’t know how big of an audience its shows will actually get. Content providers often charge per subscriber per month. The premium, according to these sources, ranges between 50 to 75 percent higher than last year’s average subscriber fees, as provided by analyst firm SNL Kagan. Disney held the record for the highest per subscriber fee last year at $5.15 per subscriber.

It’s a chicken and the egg problem for Intel. It needs good content in order to get subscribers, but it needs a lot of subscribers to get lower prices on content.

Intel photo via huangjiahui/Flickr