Keep an eye on Verizon: The telco giant hopes to rock the mobile video world this summer when it introduces a collection of streaming products — and AOL sites including The Huffington Post and TechCrunch may be included — CFO Fran Shammo told an investor conference this morning.
There had been some talk that Verizon might sell HuffPo once the $4.4 billion deal to buy AOL closes. But Shammo told the J.P. Morgan Global Technology, Media and Telecom Conference that the news and commentary sites are an “added benefit” of the deal, primarily made to acquire AOL’s sophisticated ad sales technologies.
The CFO hit hard on Verizon’s video aspirations, which the company has been talking up for more than a year. He says it will be the most powerful growth driver for wireless. The country is “moving away from linear TV to a more mobile-centric world” and the telco hopes to “stimulate even more usage because we can monetize in a different fashion.”
The goal is to create a package of mobile services “that has nothing to do with [the TV people buy to watch] inside the home” — although much of the content will still be available for viewing on the living room TV, including via Wi-Fi. Verizon will focus on “live events, sports, news, and millennial content around Awesomeness TV and Huffington Post….It’s not episodes, like an episode of CSI.”
The offering planned for this summer will have three components to make money from ad sales, data utilization, and subscriptions: The ad-supported content will come from CBS, ESPN College Sports, and AwesomenessTV and won’t run up consumers’ data fees. Verizon will offer on-demand videos which Shammo described as “more or less the world we live in today.” And the company has technology to efficiently stream live programming including sports and news — although it may take about two years before lots of people have mobile devices that can take advantage of it.
“This is a multi-billion dollar business from an advertising model standpoint,” but “there’s going to be a much bigger umbrella” for video. It will require additional investment spending to build up the wireless network to accomodate the demand, but it will be offset by creasing costs for the wireline business.
Shammo stuck to the company line when asked about FiOS’ controversial new Custom TV bundle, which allows customers to buy a basic bundle without mainstays including Disney’s ESPN. It’s suing, charging that FiOS breached their contract; the CFO says that “we believe we’re well within our legal rights” to offer the smaller package.
“Customers are tired of paying for 300 channels when the average just watches 17,” he says. He described FiOS as “a good business but it comes down to content costs.” The company wants to see whether it can “rebundle things to get a better price for consumers and better price for us.”