Intel TV service already being tested by hundreds of users

Intel (s INTC) may only have fessed up to building its own TV service this week, but the offering is already being tested by several hundred employees of the company. Intel Media boss Erik Huggers, whose unit is in charge of the service, told me on the sidelines of the Dive into Media conference in Dana Point, California this week that the friends and family test began in recent weeks, and that it was one of the reasons for breaking his silence on the project now.

Huggers said on stage at the conference Tuesday that his company is building a set-top box that will be fueled by a service that combines live TV, video on demand and a catch-up component  similar to the BBC’s iPlayer. U.K. viewers can use the iPlayer to watch anything that aired on the BBC within the last week, and Huggers was in charge of launching the project for the broadcaster. “American audiences have not yet experienced a proper catch-up service,” he told me.

Intel Media is preparing to launch the service in the U.S. before the end of the year through a mix of retail partnerships and direct sales to consumers. A lot of details are still under wraps, including the name of the service, the exact programming available, as well as its eventual price. However, Huggers said on Tuesday that his goal was neither complete unbundling nor undercutting cable. “We are not a value play,” he said, adding: “We are a quality play.” During his on-stage appearance at the conference, he suggested that Intel is working with “the entire industry” to bring live TV content to the service, but it’s unclear how advanced these negotiations are.

There was some backlash Tuesday about Intel’s announcement, namely that the device would come with a camera that would be able to identify viewers and service personalized ads. In talking to me, Huggers tried to put it in perspective by comparing it to other consumer electronics products, asking: “How many millions of homes have a Kinect device?” Of course, one could argue that people might be much less accepting of the Kinect if it was being used to identify individual users and relay that information to Microsoft.

Intel Media is run as an independent unit within Intel, overseen by a separate board, and many folks within Intel didn’t even know what the unit was up to until this week. That separation also included a lot of outside hires, and even some cooperation with small, external companies, as we first reported in January. “We are not following the playbook of Intel,” acknowledged Huggers during our interview. “We are trying to do something that is rather left field for Intel.”

This story was updated at 12:19 pm to clarify Intel’s content plans.