Verizon has been adamant that the OTT TV service it was developing would not be a “me-too” amid a growing sea of virtual MVPDs.
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Realizing that creating something that is truly differentiated and given the general decline of “linear” TV, Verizon has shifted gears and decided it would rather partner up with an existing OTT TV player and try to create something a bit different by integrating digital content from Oath, the unit that runs Yahoo and AOL.
“Our view is that we should partner with those that are in the linear game,” Verizon CEO Lowell McAdam said earlier this week in this video interview with Yahoo Finance. “Let them be very good at what they do. We’ll add digital content into that mix, and we’ll position ourselves for where we become more of an over-the-top video culture versus the linear model that we have today.”
McAdam stressed that Verizon likewise won’t be investing more deeply into the linear TV arena, and saying he doesn’t believe that traditional TV has a bright future would be an understatement.
“I think the linear model is dead; it’s just going to take a long time to die,” he said.
“We’re much more into the digital area,” McAdam said, noting that Verizon will instead place its bets on things like Yahoo’s properties and some “limited entertainment.”
Back to that idea that Verizon wants to integrate Oath’s content with an OTT TV provider, McAdam said he expects to have a partner picked for an expected launch in Q4.
He didn’t say who Verizon will partner with, but he has ample choices. Two seemingly unlikely candidates (because: mobile competition) are AT&T’s DirecTV Now service and the one that T-Mobile is developing following its acquisition of Layer3 TV.
Those that might make a better fit from a direct competitor standpoint include YouTube TV, fuboTV, Sony PlayStation Vue, Philo, Sling TV and, possibly, Hulu.
The good news for McAdam and Verizon is that some of these virtual MVPDs have already been starting to stitch digital content with traditional TV.
That Verizon has altered its stance on creating its own OTT TV service isn’t a huge surprise, given that there’s already talk of a looming shakeout of the current market. Plus, OTT TV, with its mélange of smaller margins, programming costs, and exposure to churn, is simply a tough business to break even on, let alone profit from.
CenturyLink tried its hand at an OTT TV service, found that business to be challenging, shut it down, and decided that partnering is the better approach. It’s also starting to back away from its managed IPTV service, Prism TV.
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