The US telecom giant said the acquisition "will accelerate the availability of next-generation video services," delivered to devices including mobile phones and tablets.
The deal includes intellectual property rights and other assets for Intels OnCue Cloud TV platform. Verizon will also offer to keep the 350-person Intel unit, which will continue to be based in Santa Clara, California.
"The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it," said Lowell McAdam, chairman and chief executive of Verizon.
"Verizon already has extensive video content relationships, fixed and wireless delivery networks, and customer relationships in both the home and on mobile. This transaction provides us with the capabilities to build a powerful, capitally efficient engine for future growth and innovation."
Brian Krzanich, CEO of Intel Corporation, said the sale "enables Intel to further align our focus and resources around advancing our broad computing product portfolio in segments ranging from the Internet-of-Things to data centers."
Last year, Intel confirmed it was working on the long-rumored project and said it would offer more than traditional cable companies.
Verizon made the announcement as it released its earnings for 2013 and the fourth quarter.
The company, which is a major Internet and telecom carrier, said its annual profit surged to $11.5 billion, a 13-fold increase from 2012 when it had to take charges to compensate for damage from Hurricane Sandy.
The fourth quarter profit was $5.1 billion, compared with a loss of $4.2 billion a year earlier.
Verizon also said it would close a deal on February 21 to acquire from British-based Vodafone the 45 percent stake it does not own in Verizon Wireless, the huge mobile carrier in the United States.
At the end of 2013, Verizon Wireless had 102.8 million customers, up 4.7 percent from a year earlier.
