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Verizon's AOL Buy Completes Its Content Story

Verizon has insisted in the past that it is not a content provider, but it's becoming increasingly hard to believe -- especially now that we know it lied about its plans to acquire AOL as well.

In fact, everything that Verizon Communications Inc. (NYSE: VZ) has said and done in the past year seems to be leading up to it becoming just that -- a large and powerful content provider. Sure, it will always be a network operator first and foremost, but its $4.4 billion bet on AOL confirms that it sees its future in (monetized) content. (See Verizon's $4.4B AOL Buy a Digital Media Play, Verizon CEO Denies AOL Acquisition Interest and Verizon CEO: We Are Not a Content Company .)

Verizon's EVP and President of Operations John Stratton said on a call with analysts today that the AOL acquisition was "very beautiful complement to the foundation we've been building in digital media services." The carrier has also acquired Edgecast and OnCue to further its video services ambitions, but AOL is its largest video purchase to date. (See Why Did Verizon Buy OnCue?)

The carrier has actually been building out its digital media services strategy since as far back as 2011 with an eye on pushing content to the edge of its network and making it consumable in multiple formats and across multiple networks. A lot of the details around its various offers -- LTE Broadcast, its forthcoming mobile-first video service -- are still vague, but the focus has all been on monetizing its LTE network. (See Verizon Fires Up Digital Media 'Factory', Verizon Crafting OTT Business Models and Verizon Plans Mobile TV Service in 2015.)

And, AOL, with its vast video ad properties, provides the answer to how it monetizes that content, which is increasingly important as smartphone sales reach saturation. (See Verizon Focuses on Cashing In on LTE.)

"We can envision a scenario in which Verizon leverages AOL’s ad tech platform to target consumers and measure their engagement across traditional and digital video and measure and deliver interaction across its multiple devices, platforms and properties," MoffettNathanson analyst Craig Moffett said in a research note. "That would allow for better ad serving, conversion, and ultimately attribution... and they can deliver all that across the largest wireless business in the US."

Want to know more about the wireless market? This will be just one of the many topics covered at Light Reading's second Big Telecom Event on June 9-10 in Chicago. Get yourself registered today or get left behind!

Sprint Corp. (NYSE: S), too, might find itself much more involved with content as its owner SoftBank Corp. announced that former Google (Nasdaq: GOOG) executive Nikesh Arora will soon replace CEO Masayoshi Son as president of the Japanese carrier. Arora will be charged with using his Google background to bring a more Internet-focused approach to both Softbank and Sprint. (See SoftBank's Son Names Arora New President and Google Biz Boss Leaves for SoftBank.)

Carriers like Sprint and Verizon don't have the reputation for being innovative, open and content-savvy that Google and even AOL once had. Whether they can get consumers to think of them as anything other than their phone providers remains to be seen, but I don’t think there's any denying that the future of networks is in what you can do with them. Whether it says so or not, Verizon is counting on it.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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mhhf1ve 5/20/2015 | 4:19:21 PM
We'll see how this merger compares with Comcast? Tech ad platforms for video content are going to be a disruptive business for advertising. Verizon's move here to get AOL's tech makes me wonder how many ad platforms will exist beyond Google and Facebook... Can Amazon, Apple, Microsoft.. Yahoo.. AT&T? Comcast? all create their own ad networks? 
wanlord 5/18/2015 | 2:06:36 PM
Re: 1.5 Billion Connected Devices??? There are average counts out there per household, I just think it's a bit over optimistic. Even if 5M FiOS subs had 10 devices per home, it is still quite a bit below 1.5B. Regardless, it will be interesting to see how quickly they destroy anything AOL has left.
brooks7 5/14/2015 | 2:02:47 PM
Re: 1.5 Billion Connected Devices??? Have you counted all the computers and tablets at every verizon residential and business customer?


mendyk 5/14/2015 | 1:49:30 PM
Re: Content costs I doubt that anyone is going to confuse Verizon and Google in a lineup.
wanlord 5/14/2015 | 1:20:34 PM
1.5 Billion Connected Devices??? Shingy is now quoting the 1.5 Biilion Devices VZ has access too.. I am still a bit confused on where this number is coming from...

What really matters is the "eyeballs" they have, not what bits they touch. If you consider Wireless has 110 Million subs, and FiOS TV has 5.7 Million, where are they getting this 1.5BN number from? Sure, if you consider Verizon as an enterprise, network provider, CDN owner, maybe you could figure they are "touching" that many "devices" but not actual screens...



brooks7 5/14/2015 | 12:45:51 PM
Re: Content costs Yeah that commodity ad engine known as Google.....


steve q 5/13/2015 | 10:21:28 PM
Re: 2001 I see this a win for verizon if they are planning on dumping there bigest drive engine and that is Fios. It has more content with the customer then what can happen with AOL. With the need for speed and ablity of what you can be able to watch with the new 4k this will be a short win. If it is with there cell phone service it may work but there is a problem providing the service away for a hotspot or a wifi location verizon data plan are still cost more  to customer that will enjoy on the go video service.
MordyK 5/13/2015 | 3:59:55 PM
Re: Content costs Good points Dennis. There's also the issue of Verizon's lack of any actual control of the screens themselves. So unless they change how hardware gets bought, the whole multi-screen element is hype or at best wishful thinking..
mendyk 5/13/2015 | 3:46:50 PM
Re: Content costs Also, it's nice to have the technology to do lots of things with ads on umpty-ump different devices. But there's a more important required ingredient for this to work, which as we all know is content. And you have to wonder if even two years from now, the ad-serving attraction of AOL won't be just another commodity.
MordyK 5/13/2015 | 3:05:23 PM
Re: Content costs IMO the question is about cultures as @wanlord pointed out. If Verizon can change its culture to embody both telco and tech, they can succeed. If however the telco culture and mindset retains the corporate and cultural dominance, this acquisition will look like an AOL-Time Warner redux.
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