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."
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, , Editorial Operations Director, Light Reading