By Sahil Patel
For digital media companies and content creators, Verizon’s upcoming internet-TV service might be the one to watch.
Verizon is one of multiple companies currently developing a cable-like TV service that would be delivered completely over the web, allowing users to subscribe to and watch their favorite TV channels on a slew of digital devices. Other companies at work on such a service include Sony, which just struck a deal yesterday to carry 22 Viacom channels, and Dish Network, which has similar carriage deals with Disney and A+E Networks.
Verizon jumped into this particular horse-race following its acquisition of OnCue, a virtual pay-TV service that was originally being developed by Intel Media.
What makes the company’s service particularly interesting — at least compared to Sony and Dish — is the possibility that it would carry “custom channels” from digital media companies.
This comes directly from Verizon CEO Lowell McAdam, speaking at the Goldman Sachs Communacopia conference earlier today. According to Deadline, McAdam said his company expects to deliver a service — by mid 2015 — which will offer mobile users a “bundle with major broadcast providers” in addition a collection of “custom channels” from digital content providers. “It’s the Big Four [broadcast networks] for sure, and I would tell you that the very exciting part of this is some of the digital media out of the West Coast,” he added, citing providers such as AwesomenessTV that offer “targeted content” for millennials.
Obviously it’s not clear yet how such a service would function. Most major TV channels are able to air 24 hours of “premium” programming, something not every digital company can match. But McAdam is bullish, seeing an opportunity in the “user-generated content” coming out of YouTube. “When you get more and more user-generated content, that’s a competitive advantage,” he said.
McAdam also seems to be optimistic about the future “unbundling” of cable; a day when consumers will be able to choose which channels they want to pay for, and only pay for those channels. This will come as a result of the growth in mobile usage, he predicted. “No one wants to have 300 channels on your wireless. Everyone understands it will go to a la carte. The question is what does that transition look like.”
The difficulty is — and will be — in getting major content providers to sign on, especially when business models still favor getting subscribers to pay for channels they don’t watch.
It’s one of the reasons why Intel’s struggled with OnCue — an inability to strike the right content deals with major channel providers. It’s also why Sony and Dish appear to be following the traditional cable model for their web-based TV services. (If you want to watch Comedy Central on Sony’s service, you’ll also have to pay for the 21 other channels in Viacom’s portfolio.) Even if delivered over the web, the TV bundle isn’t going away anytime soon.
So be wary of McAdam’s comments at the Goldman Sachs event. Also, be mindful of how the TV networks might react to essentially having to compete with channels from digital content providers on the type of service the CEO is alluding to.
But if the unbundle does eventually happen, and if a service can exist that gives users access to their favorite TV channels and digital content providers, it certainly appears that Verizon wants to be there first. “We can make it a win-win,” McAdam said.