June 8, 2018
NEWS ANALYSIS — Verizon June 8 announced that longtime CEO Lowell McAdam is retiring at the end of the year, and will be replaced by Hans Vestberg, EVP, president of global networks and CTO, on Aug. 1.
McAdam, who will serve as executive board chairman through the end of the year, after which he will employ a golden parachute as non-executive chairman, leaves a legacy of disappointment when it comes to succeeding in over-the-top video.
Unlike rival AT&T, which acquired DirecTV Now and is attempting to close a $85 billion purchase of Time Warner to fuel its OTT video aspirations, Verizon has limped along acquiring yesterday brands (AOL and Yahoo combined into Oath subsidairy) while stumbling to rollout a viable proprietary online TV service or competitor to Netflix, Amazon Prime Video or Hulu.
That Verizon needed a new CEO, one with digital tech experience who could do more than skip fiscal calls while making the rounds of Wall Street gabfests, was driven home last month when McAdam raised the white flag of defeat.
After the failed launch of Go90, the oddly named mobile-centric video app that attempted to connect with younger audiences through quirky programming, McAdam said Verizon going forward would partner with a third party in future OTT video plans.
It tried that in 2013 with “Redbox Instant by Verizon,” a hybrid strategy aimed at melding packaged-media rentals at kiosks with subscription streaming video. The service lasted just 18 months, with Redbox admitting the erstwhile Netflix competitor was “not as successful as we hoped it would be.”
Now, Verizon wants to piggyback on someone else’s OTT ground game.
“Let them be very good at what they do,” McAdam said last month at a market confab. “We’ll add digital content to that mix, and we’ll position ourselves for where we become more of an OTT video culture versus the linear model that we have today.”
Indeed, McAdam, like a lot of pay-TV executives, is facing exponential churn among his linear Fios TV subscribers in a rapidly evolving SVOD landscape.
“We’ll integrate our Oath assets into the linear assets that they have and bring the full package to customers,” he said.
While sounding like so much digital Malt-O-Meal, the fact remains Verizon remains on the outside while rivals Dish Network (Sling TV), AT&T (DirecTV Now), Charter (Spectrum TV Plus), Google (YouTube TV) and Comcast (X1 with Netflix) carve up the OTT landscape within the shrinking linear TV ecosystem.
Maybe Swedish-born Vestberg, who once ran mobile network pioneer Ericsson, will succeed in walking the talk.