Tacking onto its high-profile acquisitions of OnCue from Intel, AOL and most recently Yahoo (which is expected to close early next year), Verizon may be set to buy yet another company for its growing mobile video portfolio.
Recode is reporting that Verizon Communications Inc. (NYSE: VZ) is in talks to acquire startup company Vessel, founded by the former CEO of Hulu LLC Jason Kilar. Vessel is a subscription service highlighting online video stars and priced at $2.99 per month for viewers. Again according to Recode, the company has raised more than $130 million from investors, including Amazon.com Inc. (Nasdaq: AMZN) CEO Jeff Bezos, but hasn't gained a wide audience for its service. Vessel apparently also has a messaging product in development that has been likened to Snapchat.
Tim Armstrong, CEO of AOL under Verizon, recently explained the telco's media strategy, saying that Verizon is looking to fill two gaps for its customers. At a Bank of America investment conference, he said that on the one hand Verizon wants to help media companies continue to make the transition from analog to digital platforms. And on the other hand, Verizon wants to boost monetization through data-driven advertising technology. Armstrong said Facebook and Google (Nasdaq: GOOG) have been very successful in the ad business, but that he believes Verizon specifically has the capability to help customers build strong brands.
What exactly that entails is unclear. But Armstrong thinks brand advertising dollars have lagged in the digital space, and that there's a market opportunity in capturing this spending as it moves from analog to digital media.
Verizon's Digital Media Services division, with its video processing and delivery services, has been very successful, but the jury's still out on whether the telco can drive growth in a consumer-facing media business. So far, the news isn't good on Verizon's Go90 mobile video offering, and that's despite the early hype and the massive resources the company invested in its launch. (See Verizon Backpedals on Go90.)
In June, Verizon CFO Fran Shammo tied the acquisition of Yahoo to both Go90 and the assets from AOL, saying that the company is pushing to increase viewership on its platforms so that it can earn greater advertising revenue. Presumably if Verizon does buy Vessel, the content from that startup service will be added to the Go90/AOL mix. (See Verizon's Shammo Ties Yahoo to Go90.)
— Mari Silbey, Senior Editor, Cable/Video, Light Reading