Verizon announced quarterly results today, revealing a decline in Fios video subs of 18K. Verizon CFO Matt Ellis directly attributed the losses to cord cutting and competition from OTT services. It’s a 3Q 17 theme we’ve already heard coming from traditional pay-TV operators, including AT&T.
Unlike AT&T who has an OTT streaming TV offer with DIRECTV NOW, Verizon has no hedge for cord-cutting. At least not yet. They are working on one, but don’t expect to see it until at least Spring of 2018, according to reports. AT&T’s bad losses of 390K pay-TV connections in 3Q 17 were somewhat cushioned by net adds of 300K DIRECTV NOW OTT subscribers.
Although, truth be told, substituting OTT streaming subscribers for traditional pay-TV subscribers is somewhat akin to trading quarters for dimes. But I guess that’s better than trading quarters for nothing.
Verizon has been working on some form of a Verizon OTT streaming product for some time. Ellis said negotiating rights is taking longer than expected, which is kind of puzzling. The blueprint for streaming OTT rights with programmers is already in place, with several OTT streaming offers already available. This is not uncharted territory.
I don’t see what should be so complicated, unless Verizon is looking to do something different. Ellis says Verizon does not want to launch a ‘me-too’ type service, which offers little or no differentiation over already existing offers. But everyone says that, on their way to launching just that – a me too service.
Verizon does have some unique existing assets with Oath – their media and advertising platform. Perhaps they’re looking for some unique way to integrate that platform with a streaming Verizon OTT offer. Is that delaying gaining the necessary rights? Perhaps.
Although, Google, who is no stranger to media and advertising integration has already launched their own streaming OTT service with YouTube TV.
Verizon did have a couple bright spots in their earnings report. On their way to quarterly revenue of $31.72 billion and $3.62 billion net income, they added 603K wireless connections, of which 486K were smartphone net adds. They also added 238K wearable connections.
Fios broadband subscribers increased by 66K, most of which came in the heavily contested Northeast region. Verizon now has 4.6 million Fios video subscribers and 5.8 million Fios broadband subscribers.