CFO: Verizon OTT Service Eyeing Summer Launch

23 Jan, 2015 By: Erik Gruenwedel

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Telecom won’t operate platform as linear TV

Verizon’s secretive over-the-top video service is slated to launch this summer and will not operate as a linear TV business model, the telecom’s CFO told analysts.

Speaking Jan. 22 during the telecom’s quarterly fiscal call, Fran Shammo didn’t reveal much new information on the OTT venture, which has been in the planning stages since Verizon last year acquired the assets of Intel Media, whose IP property included OnCue, an Internet-based TV platform.

Verizon’s joint venture with Outerwall for Redbox Instant ended last year when the kiosk vendor shuttered the hybrid disc/SVOD rental service, citing sustained fiscal losses.

Shammo indicated Dish Network’s pending $20 monthly OTT service and CBS’s recently launched All Access SVOD service underscore the subscription streaming business model and the reality that content owners are willing to explore new distribution channels.

“That's exactly why we are going to execute on it,” Shammo said.

When asked how Verizon would absorb the requisite content costs associated with a standalone OTT service, the CFO said they would not emulate the 3% to 4% annual increase in content costs for FiOS TV — the telecom’s fiber-optic multichannel video program distribution channel with nearly 6 million subscribers.

With Netflix, Hulu Plus and Amazon Prime Instant Video investing heavily in original and third-party content, media companies have upped content costs as SVOD channels seek exclusive domestic and global rights to episodic programing.

At the same time, Shammo said Verizon’s OTT service would not emulate Sony Corp.’s pending PlayStation Vue that will launch with about 75 channels, including CBS, Fox, NBC Universal, Discovery Communications and Scripps Networks, among others.

“You should not think about [the OTT service] as a traditional linear TV model. It's going to be, I would think, a different type of a model. So, we'll wait till midsummer when we can talk more about that. But within our plan, we do have those content costs [factored in],” Shammo said.

 

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