As HBO and CBS move ahead with their à la carte plans, Verizon is working with content providers to hammer out a business model for its planned OTT service.

Alan Breznick, Cable/Video Practice Leader, Light Reading

October 23, 2014

2 Min Read
Verizon Crafting OTT Business Models

Heartened by the recent à la carte move of HBO and CBS, Verizon is now working with its content partners to fashion business models for its own planned OTT ventures.

On the company's earnings call Tuesday, Verizon Communications Inc. (NYSE: VZ) EVP & CFO Fran Shammo said Verizon is looking at delivering over-the-top (OTT) video services to consumers in two different ways, over LTE Multicast to wireless subscribers on its LTE network and over the Internet to home broadband users. He said each method offers a distinct way to address the growing demand for untethered video services.

In Shammo's view, Verizon will rely on LTE Multicast to beam major live TV events to wireless subscribers, including big concerts and sporting events like the Super Bowl. He noted that multicast technology is "so efficient" for delivering that kind of mass-appeal programming to large groups of viewers. Plans now call for Verizon to launch that live mobile TV service sometime late next year, after enough compatible phones, tablets and other mobile devices are in consumers' hands and enough content providers are on board with the concept. (See Verizon: Multicast Is 'a Year Away'.)

Shammo hinted that Verizon's proposed OTT service might be more targeted at younger consumers who have either cut the pay-TV cord or never signed up for a pay-TV subscription. Home Box Office Inc. (HBO) officials gave similar indications last week in announcing their OTT plans, noting that 10 million US TV homes now pay for broadband service but not pay-TV service. "Content providers are trying to penetrate the millennial base," Shammo said.

Want to know more about OTT services? Check out our dedicated OTT content channel here on Light Reading.

Google announced the Nexus Player along with the new Nexus 6 "phablet" from Motorola and the new Nexus 9 tablet from HTC on Wednesday afternoon. Like the Nexus Player, the other two devices will run on the latest version of the Android operating system, also known as Android 5.0 Lollipop. (See Google's Nexus 6 'Phablet' Is LTE-A Ready.)

With this in mind, Verizon is now fleshing out various possible business models for OTT service delivery with its content partners. But Shammo does not expect these models to disrupt the existing subscription and advertising models for delivering linear video programming to pay-TV subscribers.

"We're having a lot of discussions with content providers on models going forward," Shammo said. "We're bringing in a lot of innovative models … it's another means of how we open up the ecosystem with innovative avenues."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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