We’ve been covering Verizon’s FiOS widget strategy (I tend to use the term widget and app interchangeably) for some time now. They’ve been steadily expanding the scope of their FiOS widget bazaar to include a variety of apps. The latest – YouTube on FiOS.
“Starting today, FiOS TV customers with a DVR or HD set-top box can use the remote control to search for and view user-generated content from the world’s most popular online video community right on the biggest screen in the house – the TV,” reports Verizon on their At Home blog. YouTube joins other online video options for FiOS, including Veoh, blip.tv, and Dailymotion.
With this online video strategy, Verizon is hoping to get ahead of the OTT video curve. The fear of course from Verizon, and their multichannel subscription video brethren, is that subscribers will see ‘enough’ value from free OTT video offerings like YouTube to cut the cable cord. By integrating these OTT video options directly into their paid offering, Verizon hopes subscribers will continue to see value in paying for a subscription video service.
In the midst of these Verizon tactical moves, the entire OTT model is also changing. The two most popular OTT video offers, YouTube and Hulu, are both moving to add paid models to their free options. Hulu is rumored to be planning a $10/month subscription for premium content. YouTube just launched an online video rental store.
These developments highlight the challenge in defining the business model for video going forward. Traditional subscription models are looking to integrate free OTT video, while free OTT video providers are looking for ways to generate revenue through subscriptions and VOD/PPV. Quite the conundrum.
The reality is, content isn’t free — especially good content. It costs money to create and whoever produces it needs to be paid or the flow of good content will stop. What we’re witnessing now is the OTT video marketplace trying to figure out how to come to grips with that reality.
Content will always cost money. Any business model that suggests otherwise is doomed to failure. The challenge for service providers is to pick the right strategy and platform that allows them to play in the game until such time that the business model rules get sorted out.