Intel to launch set-top box based video streaming service

New device contains camera to observe viewers' habits and movements

Intel is set to launch a web-based video streaming service this year, as the chipmaker attempts to find new means of making profit in the face of declining PC sales.

The world's largest computer chip manufacturer has felt the force of a drop in sales as it struggles to compete with the rise of tablets, smartphones and other mobile devices. Indeed, the company's fourth quarter income for 2012 suffered a year-on-year decline of 27 per cent.

However, Intel believes it can take advantage of a rise in demand for online streaming of television shows and other video content.

"We have been working over the past year to set up Intel Media, a new group focused on developing an internet platform," corporate VP of Intel Media, Erik Huggers, told AllThingsD.

"It's not a value play, it's a quality play where we'll create a superior experience for the end user," said Huggers, who in a previous job helped launch the BBC iPlayer.

But rather than relying solely on online streaming, Intel's plans revolve around a proprietary set-top box that customers will need if they are to use the service. The hardware doesn't yet have a name or a price, but Huggers revealed that Intel employees are already testing it in their own homes.

In what might be regarded with suspicion by potential consumers, the Intel set-top box contains an in-built camera to observe movements and TV viewing habits in order to personalise the way users watch television.

"My kids may watch programming geared toward them, and I'll watch programming geared toward me," said Huggers. "If there's a way to distinguish who is watching what, advertisers can then target ads at the proper parties."

The move into the living room will see Intel competing with the likes of Amazon, Netflix and LoveFilm, which offer video streaming via computers and games consoles. It also marks a move into Apple territory. Apple TV already allows users to watch television shows and films from the comfort of their living room.

Huggers insists that Intel is serious about internet television streaming and plans to be competing in this space over the long haul.

"Rome wasn't built in a day," he said. "It'll take time."