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.
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