Verizon Keeping Mobile, In-Home Video Separate22 Apr, 2016 By: Erik Gruenwedel
Verizon Communications is intent on delivering video entertainment to two separate audiences: Younger millennials permanently attached to their portable devices and conventional TV subscribers eschewing the mandatory 150-channel plan.
Speaking during the telecom’s April 21 fiscal call, CFO Fran Shammo said there was a 38% uptake in new subscribers in the first quarter (ended March 31) on Custom TV, a monthly pay-TV plan that allows users to select their own abbreviated (50+) channel line-up. Supplemental $6 packages cater to movies (MGM, Universal Pictures, Sony Pictures, IFC, etc.) sports and children and families.
The focus on skinny bundles underscores the reality Verizon added 36,000 net FiOS video subs in the quarter — down 60% from 90,000 net additions in the previous-year period. It ended the period with 5.8 million video subs, up 2.2% from 5.7 million a year ago.
“[Custom TV] has been very successful. It's the right thing to do. This is what customers want. They don't want to pay for 300 channels anymore and only watch 17 on average,” Shammo said.
Custom TV subs generate less revenue for Verizon but contribute higher margin than the traditional FiOS video customer. The telecom increased FiOS broadband subscribers 5.7% to 7.1 million.
With the recent launch of the go90 app, which enables mobile users free access to ad-supported content, Verizon is purposely circumventing TV Everywhere by targeting unique content not available in the home. To generate that content, Verizon acquired a minority (25%) stake in AwesomenessTV and 50% ownership with Hearst in Complex Media, and inked a co-venture with Hearst for exclusive channels: RatedRed and Seriously.tv.
“We're going to a mobile-first strategy outside the home. It has nothing to do with in-home content,” Shammo said.
In addition to short video clips and news from The Huffington Post, AOL and other sources, go90 will be available on assorted AOL platforms to increase exposure. Shammo didn’t reveal go90 user data, saying it still early in the app’s rollout.
“This is really where we're taking the video product … which is very different than what everyone else is talking about,” Shammo said.