Verizon Video Woes Pile On

Verizon pioneered its Fios telco TV service more than a decade ago and rapidly rose through the ranks of pay-TV providers. But fast forward to 2017, and the company's direct-to-consumer video efforts don't look so promising.

In the latest setback, Verizon Communications Inc. (NYSE: VZ) is reportedly having difficulty signing deals with programmers for a new over-the-top TV service. According to Bloomberg, the telco had been hoping to launch its OTT offering before the end of September, but troubles with content negotiations are threatening to delay that debut. Verizon needs popular programming to compete with traditional rivals in the video market, but also to head off competitive threats from the likes of Facebook , YouTube Inc. and more. If it can't sign the necessary programming agreements, it can't hope to propel a new OTT service to success.

Verizon's latest OTT struggles would be bad enough on their own, but they come as the telco is also flailing on other video fronts. The company went live with its Go90 mobile video offering nearly two years ago, but the service has never gained traction with viewers -- millennial or otherwise. Back in late 2015, the director of Fios TV hyped the idea that Go90 was a sign of things to come for Verizon, noting that the company was "definitely positioning ourselves very clearly for the over-the-top future." (See FiOS TV Director Cuts the Cord.)

Go90 may have been a sign of the future, but if so, it turns out it wasn't a positive one.

Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.

And what about Fios TV? That service continues to chug along, but not nearly as well as it used to. So far this year, 28,000 customers have abandoned the Fios video service, and Verizon has acknowledged that there's a "growing shift in wireline revenues attributed to fiber-based products." Although Verizon doesn't break out Fios video revenues specifically, the logical conclusion is that they're falling.

Meanwhile on the communications front, the company continues to send mixed messages about where Fios TV is headed. On the one hand, the telco expanded with Fios into the Boston area late last year. On the other hand, Verizon's made clear that it wants to work with new communities on broadband initiatives that don't include Fios service at all. (See Verizon Takes 'One Fiber' to More Cities.)

New Verizon IPTV set-tops
New Verizon IPTV set-tops

And then there's the service itself. A sneak peak at new technology during Mobile World Congress this year suggested Verizon would shortly upgrade Fios TV to all-IP delivery. Executives couldn't agree on timing for the update, but the implication was that the introduction of a new Fios TV incarnation would happen sooner rather than later. (See This Is the New Fios TV From Verizon.)

After more than five months, there's still no word of a launch date. (See Verizon Beta Tests IPTV, Stays Mum on Launch.)

For all of the billions that Verizon has spent on video content and technology, it's not doing more than treading water as a consumer video service provider. Perhaps that will change before the end of 2017, but so far, there's not much reason for optimism.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

Michelle 8/14/2017 | 1:30:17 PM
Not as easy as it looks Negotiating content deals is apparently a lot harder than it looks. I can see how negotiations might slow down a video business like this one.
bosco_pcs 8/14/2017 | 4:56:38 PM
Re: Not as easy as it looks Perhaps that is why VZ bought AOL and Yahoo assets. For both content and adtech. However, maybe the company has deeper problems. If you takes a big picture view, it has gone through many strategies. FiOS was hot for a while but it also tried to maximize its copper asset with DSL. Then it decided to do away with wireline and bought out its wireless JV from VOD. Unitl wireless is saturated! In the meantime, it unloaded some wireline including FiOS to Frontier. 

Perhaps its only decisive run is to roll out 4G quickly, forcing AT&T to react - which might be the reason of the ill fated attempt to buy out T-Mobile - and putting Sprint and other smaller regionals in a competitive disadvantage.

Its confusing moves can also affect content deal negotiations since its potential "partners" might be wary of its jerky moves (just a conjecture though).

In comparison, after its failed attempt to buy T-Mobile, AT&T has been consistent and aggressive in its move in contents, first as a carrier with DirecTV acquisition and now a true provider with TWX. It makes itself formidable in negotiation of deals but more importantly - predictable.
KBode 8/15/2017 | 1:21:47 PM
Re: Not as easy as it looks "However, maybe the company has deeper problems."

I think this company spent thirty years focused on legacy turf protection and lobbying, and now has absolutely no idea how to innovate or disrupt. I'm not sure buying up failed 90s internet brands and simply declaring yourself on par with Facebook and Google is the answer.

I've long thought they should stick to their core competency of running excellent networks, but that's not enough to please the bottomless stomach of Wall Street investors. 
bosco_pcs 8/15/2017 | 1:55:53 PM
Re: Not as easy as it looks In a way, VZ, as the offspring of the baby bell, was dealt a poor hand. 

Mind you, it was an ILEC with all sort of legacy problems facing CLEC challenges before the telecom bubble. When I was there, even though I worked for the unregulated tech sub, it still had to deal with a lot of issues like unions etc.

Look at the legacy airlines, they all went through bankruptcies and consolidations. So VZ, T and even CBB have been doing reasonably well, all things considered. 

It is easy to say ignore the Wall Street gang but most companies, especially leveraged comapnies like VZ, have to sometimes swallow their pride to make the finance folks happy. Why? Do you know their cost of doing business will rise or fall, sometimes quite dramatically, when their credit ratings are lowered or raised? Frontier is facing a squeeze right now as we speak. Softbank's Son Sen is paddling Sprint so hard for the same reason.

So while most of us who post here on LR are techies, we can't escape the influence of money
FbytF 8/15/2017 | 4:16:06 PM
Not as easy as it looks I think VZ's problems in video are directly related by the decision to stop expanding the FiOS footprint. Without the subscriber base it's difficult to leverage the content providers. I'm so old I have (had) a landline from VZ until this month. I was paying $70/month for voice from VZ because I didn't want to give anymore business to those losers at Comcast. I used to laugh, every month my VZ bill had an advertisement to add 1.5M DSL service for $29/month. WTF orders 1.5M DSL service!!! Unfortunately I got tired of waiting for VZ to come up with something better and regretfully switched my voice over to Comcast, first time in my adult life I'm not a customer of Verizon but its like they really don't want anything but wireless business anyway.
KBode 8/21/2017 | 7:02:08 PM
Re: Not as easy as it looks "It is easy to say ignore the Wall Street gang but most companies, especially leveraged comapnies like VZ, have to sometimes swallow their pride to make the finance folks happy. "


That may be true, but I can't help but laugh at the fact that ten years ago, Wall Street yelled at any major ISP that dare put money back into the network. Now, Wall Street is punishing telcos that actually listened to them. Note the ILEC stock dips the last few weeks. Damned if they do...
wanlord 9/16/2017 | 11:48:26 PM
Re: Not as easy as it looks I disagre that they were dealt a poor hand. VZ is much more than just an offspring of baby bells and had plenty of chances to improve their hand over the years as they were formed from merging BA and GTE and then pulling in MCI, creating VZW with their Vodaphone partnership and then fully owning it. Although their choices to spin off FiOS in some regions, and then waste money on Go90, and now with AOL and Yahoo, I think they have done an okay job staying relevant. They just need to understand they are not going to compete with Google, Facebook, Netflix and work on disrupting some other industry, including their own..
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