Verizon Looking to Bundle Third-Party OTT Video with 5G Rollout

Still smarting from its $1 billion write-down of the short-lived Go90 video app, including forays into original content production (“The Runner” reality TV series), Verizon is embracing high-band 5G spectrum, which claims to offer wireless network speeds 100 times faster than the current 4G spectrum.

But rather than create and market an online TV platform featuring third-party content pay-TV channels, Verizon will help market third-party over-the-top video services – similar to what Amazon Channels does.

Last month, Verizon launched 5G network coverage in Los Angeles, Houston, Indianapolis and Sacramento, Calif. Rollout included the choice of a free Apple TV with 4K functionality or Google Chromecast device, and 90-days access to online TV platform YouTube TV.

“You should expect to see us continue to look for ways to be disruptive to the distribution model,” CFO Matthew Ellis told attendees Nov. 14 at the Morgan Stanley European Technology, Media & Telecom confab in Barcelona.

In terms of overall content, Ellis said Verizon would focus internally on the newly restructured Verizon Media Group subsidiary (formerly Oath), which features three units targeting consumers, business and media, respectively.

The latter, headed by current Oath CEO Guru Gowrappan (who replaced departing Tim Armstrong),is fixated on news, sports, entertainment and finance via Verizon subsidiaries such as Yahoo!, AOL, HuffPost, TechCrunch, Engadget, and Tumblr.

Verizon earlier this year partnered with the NBA for video content streamed, including live games, original programming, fantasy leagues and interactive experiences on Yahoo! Sports and other platforms.

The deal mirrored an earlier agreement with the NFL to stream in-market and national games, including national pre-season, regular season, playoff games, and the Super Bowl nationwide – regardless of mobile network.

“You’ll see us continue to do some things in content, but it’s going to be focused on those super channels within the [Verizon Media Group] platform as opposed to the kind of more traditional video [movies, TV shows] content,” said Ellis.

 

Verizon Loses 151K Fios Video Subs, Puts Focus on 5G

Verizon Oct. 23 revealed it lost 151,000 Fios video subscribers in third-quarter (ended Sept. 30), impacted by ongoing consumer shifts away from traditional linear pay-TV offerings. The telecom ended the period with 4.49 million Fios video subs compared to 4.64 million subs in the previous-year period.

Net video sub losses totaled 63,000 compared to 18,000 last year. Year-to-date net losses have reached 122,000 compared to 46,000 during the previous-year period. Broadband connections remained relatively flat at 6.95 million compared to 6.97 million.

More importantly, the wired segment (Fios video and broadband) reported an operating loss of $50 million on revenue of $7.4 billion, compared to operating income of $65 million and revenue of $7.7 billion last year.

To new CEO Hans Vestberg, the video sub/operating income losses apparently don’t warrant mention as the telecom rolls out what it claims is the world’s first 5G wireless commercial network.

“With the beginning of the 5G era in this fourth quarter … we are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy,” Vestberg said in a statement. “Verizon is best positioned to take full advantage of the opportunities offered by the new game-changing generation of technology.”

Indeed, Verizon ended the period with more than 112 million wireless connections (mobile phones, tablets and related devices), up 2.2% from 109.6 million connections last year. The company added 295,000 mobile phone connections.

Separately, Verizon said it does not expect to meet the previous announced target of $10 billion in Oath revenue by 2020. The media entertainment unit, which includes AOL, Yahoo, Verizon digital media services and related brands such as TechCrunch, Engadget and HuffPost, reported quarterly revenue of $1.8 billion – down nearly 7% from last year.

Tim Armstrong, the former AOL CEO who headed Oath since its inception, exited the unit in September and was replaced by K. Guru Gowrappan, effective Oct. 1.

Finally, go90, Verizon’s short-lived video entertainment app targeting younger mobile users, ceased operations in quarter after generating about $1 billion in losses.

Oath CEO Tim Armstrong Reportedly Departing Verizon, Among Other Executive Exits

Verizon’s digital media unit Oath appears to be in a state of change with CEO Tim Armstrong and other executives reportedly planning to leave the company.

Media reports – citing inside sources – said Armstrong’s exit would follow on the heels of Bob Toohey’s recent departure as chief people officer. Other executives said to be leaving include CFO Vanessa Wittman and Natalie Ravitz, chief communications officer.

Oath was founded in 2017 following Verizon’s acquisitions of AOL and Yahoo. Digital media brands folded into Oath include TechCrunch, Engadget, Edgecast and HuffPost, among others.

Armstrong, who headed AOL from 2009 until its purchase by Verizon, has been tasked in part to help the telecom establish an over-the-top video presence.

Indeed, after Verizon spent nearly $1 billion launching Go90, an ad-supported mobile app targeting the 18-34-year-old demo, Oath took over the app after it failed to gain traction. It was scuttled shortly thereafter.

Go90 remains a stain on former Verizon CEO Lowell McAdam, who stepped down in August.

Verizon reportedly declined to comment on the scuttlebutt.

Verizon Officially Pulling Plug on Go90 Streaming App

As expected, Verizon is reportedly calling it quits on Go90, the oddly named ad-supported mobile-centric streaming video app launched in 2015 with much fanfare and hundreds of millions of dollars to the Millennial market.

“Following the creation of Oath [which includes Yahoo and AOL], Go90 will be discontinued,” Verizon said in a statement first reported by Digiday.com. “Verizon will focus on building its digital-first brands at scale in sports, finance, news and entertainment for today’s mobile consumers and tomorrow’s 5G applications.”

Tim Armstrong, CEO of Oath, earlier this year alluded to Go90’s pending demise at the Recode tech confab in Southern California.

The end of Go90 underscores Verizon’s (and exiting CEO Lowell McAdam) failure to create a standalone streaming video platform capable of competing against Netflix, Amazon Prime Video, Hulu – or online TV.

While Verizon still has exclusive mobile streaming access to the Super Bowl, the nation’s largest wireless telecom with more than 150 million subscribers continues to struggle in OTT video.

In 2014, the company – along with Redbox – shuttered Redbox Instant, an ambitious platform aimed at melding disc rental with streaming video.

With both companies unwilling or unable to enter the content arms race against Netflix & Co., Verizon – backed by a dedicated staff of Go90 employees – reportedly spent more than $200 million on original short-form content for the platform.

One of the service’s first big series was a reality-competition show produced by Ben Affleck and Matt Damon, dubbed “The Runner”.

The series offered a $1 million prize to one contestant capable crossing the country unnoticed over a 30-day period while eluding eight two-person chase teams following clues.

The show had the misfortune of launching just as the Pokémon Go augmented reality game was becoming a summer cultural phenomenon among smartphones’ biggest target market: teens and Millennials.

Go90 did score a creative hit with Kobe Bryant’s Oscar-winning short film, Dear Basketball. Less so, apparently, with targeted audiences.