Encouraged by the recent over-the-top (OTT) moves of several major programmers and pay-TV providers, Verizon executives are feeling pretty good about the prospects for their own planned OTT services later this year.
Speaking on the company's earnings call Thursday, Verizon Communications Inc. (NYSE: VZ) EVP & CFO Fran Shammo said company officials are heartened by the OTT service launch announcements of Dish Network LLC (Nasdaq: DISH) and CBS Corp. (NYSE: CBS). Along with Home Box Office Inc. (HBO) and Showtime Networks Inc. , those two traditional pay-TV players have jumped early into the Internet video arena with standalone subscription offers for consumers. (See Dish Slings OTT Service – What It Means.)
"There are a lot of positive things coming out of the environment," Shammo told analysts on the call. Most notably, he said, the new OTT ventures indicate that content owners are "open" to new business models for distributing their programming.
Verizon has been looking at delivering OTT video services to consumers in two different ways: the first over LTE Multicast to wireless subscribers on its LTE network and the second over the Internet to home broadband users. In the company's last earnings call, Shammo said each method offered a distinct way to address the growing demand for untethered video services, with Verizon likely using LTE Multicast to beam major live TV events to wireless subscribers and the Internet to target some type of subscription service to the growing group of "millennials" who have never been pay-TV customers. (See Verizon Crafting OTT Business Models.)
Shammo declined to reveal much more about Verizon's OTT plans on yesterday's earnings call. But, giving a little tease, he did say the company will not be pursuing "a traditional linear TV model." "It will be a different model," he said. He promised that the company will have "a lot more to say about that when we launch our first product this summer."
The latest OTT tidbits from Verizon come as the market momentum is clearly building for more over-the-top ventures by conventional pay-TV programmers and distributors this year. For instance, a new consumer study released earlier this week by Parks Associates found that 17% of US broadband households would likely subscribe to HBO's planned OTT service, which is slated to launch sometime later this year. Even more tellingly, the study found that 91% of those likely to subscribe are currently pay-TV subscribers and about half of them would cancel their pay-TV service after taking the HBO service.
"HBO picked a good time to announce its standalone HBO Go OTT service in the US," said Glenn Hower, a research analyst for Parks Associates. "The percentage of subscribers interested in OTT video services is trending upward, and more industry players are planning to launch their own OTT services."
— Alan Breznick, Cable/Video Practice Leader, Light Reading