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Verizon Cites OTT Video for Decline in FiOS Video Subs

20 Apr, 2017 By: Erik Gruenwedel

Verizon April 20 reported it lost 13,000 FiOS Video subscribers in the first quarter, ended March 31. The telecom added 43,000 video subs in the previous-year period. It ended the quarter with 4.68 million subs, compared with 4.67 million during the previous-year.

On the company's fiscal call, CFO Matt Ellis attributed the video sub decline to ongoing changes in consumer video consumption habits.

“Losses were indicative of softer demand for linear video due to the increase in over-the-top offerings, mobile video consumption and competitive promotional offers, particularly in the New York market,” Ellis said. 

Indeed, Verizon in 2015 launched the free go90 app, enabling mobile device users to access ad-supported video content, including original fare.
Without citing specific user data, Ellis said video consumption on go90 maintained an average daily usage of about 30 minutes per viewer, with less than 20% of the app traffic served on Verizon’s network. This means more than 80% of go90 users are accessing the app via third-party networks.

Critics contend Verizon is losing money on go90 due to underwhelming consumer adoption.

“During the quarter, the app was updated to improve the user interface, increase content discovery and enhance the programming and advertising capabilities,” Ellis said.

Last December, CEO Lowell McAdam said an “awful lot of the hype” early about go90 had given way to “measured thinking” among senior management.

“We knew that this was going to be what we called a ‘patient money’ business. If you look, for example, how long it took Netflix to really ramp up and hit their stride, that is sort of a model for us],” McAdam said.

Ellis said the company remains committed to assembling video platforms to leverage the “growing customer demand” for digital media.
He said the focus would remain on “content pillars,” such as news, sports, finance and lifestyle. Verizon is looking to combine and rebrand AOL and Yahoo as the Oath brand.

Verizon acquired Yahoo for $4.8 billion last July, but closing the deal has encountered challenges following revelations of two data breaches affecting upwards of 1.5 billion user accounts.

“We are actively working on integration streams with Yahoo to ensure a smooth consolidation when the transaction closes, which is expected during the second quarter,” Ellis said.

About the Author: Erik Gruenwedel

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