Depending on who you ask, Qwest is either very shrewd or a little dumb, at least in the context of video services. Unlike their RBOC brethren, AT&T and Verizon, Qwest has chosen not to deploy their own subscription video model through IPTV or traditional cable. They instead rely on a DirecTV resale approach to offer video, at least for now.
Qwest executives say the ROI for IPTV simply isn’t there (at least for them), and therefore not worth the risk. They’ve taken their fair share of criticism for that decision. Their critics argue by not providing their own video (and a FTTH platform to deliver it), they risk marginalization by customers, who will choose Qwest’s cable MSO competitors who can offer double and triple play packages with faster Internet speeds.
But Qwest is apparently hedging their bets. They’re looking to the emerging trend of over-the-top (OTT) video as an answer to those critics. Multichannel News (via BroadbandReports.com) reports that Qwest invested $10 million in OTT upstart ZillionTV, for the rights to offer it exclusively in their footprint.
ZillionTV is testing a streaming video solution that will reportedly offer cable network programming, broadcast network content, and movies in a VOD format direct to a subscriber’s TV. Initially ZillionTV planned to partner with ISPs to distribute the service. They changed course slightly last year and added direct to consumer retail as a channel as well. ZillionTV competes with the likes of Sezmi and Skittter, all of whom are trying to do variations of the same thing. None of these services have seen a commercial roll out of any scale yet.
With Zillion, Qwest is apparently looking for some type of hybrid approach to deliver video. DBS resale, combined with an OTT offering. An approach they hope customers will view as better than the standing tradition of consuming video via cable/IPTV/DBS.
And while providing IPTV type services has its risk, so too does this approach. ZillionTV hasn’t exactly reached “no one ever got fired for selecting ZillionTV as a partner” status yet. They’ve had well documented troubles already, and they haven’t even launched the service yet. But regardless of OTT partner, the OTT approach has significant risk as well. Regardless of the hype surrounding the trend, it’s an unproven business model, requiring a significant number of paradigm shifts for both consumers and suppliers. It’s by no means a slam dunk. By putting all their video eggs in the OTT model, service providers should not underestimate its risk. The ultimate decider, as always, will be consumers. They apparently are interested in OTT, but it’s not proven whether that interest translates to a viable business model for service providers. Stay tuned.
