Verizon reportedly preparing internet-delivered TV service

Verizon sign
The push to reinvent the TV package comes as mounting research shows a steady increase in customers cutting the cord.

Seeking to keep up with rival distributors like DirecTV and Dish, Verizon is preparing its own internet-delivered TV service, according to a report by Bloomberg.

The telecom giant has been working to secure streaming rights to several networks, the report said, citing “people familiar with the matter.” The new service could launch as soon as this summer.

The live online platform would be distinct from both of Verizon’s existing distribution platforms, the Fios bundle and the go90 streaming service. The skinny bundle would give Verizon an answer to Dish Network’s Sling, which was rolled out in 2015 and DirecTV Now, which went live last fall.

The field of internet-based, streamlined, attractively priced TV packages has grown crowded, with Sony’s PlayStation Vue up and running and nationwide entries from YouTube and Hulu due out this year. Programming is delivered through apps made for streaming devices like Apple TV or Roku, plus apps designed for mobile phones and tablets. Comcast also plans an internet TV service on its existing footprint that will debut in the third quarter, but cable companies haven’t yet mounted a capital-intensive effort to transcend their own highly geo-specific service areas.

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Skinny-bundle pricing varies widely, but the operating principle is to offer customers an alternative to $100-plus traditional packages stuffed with channels they may never view. Comcast’s Stream service will start at just $15 a month. Sling’s basic tier is $20 a month and DirecTV Now’s entry-level is $35 for 60 channels. According to Bloomberg, Verizon’s offering will closely track DirecTV’s in terms of price.

Mimicking the “triple play” discounting of traditional set-top bundles, which offer extra value for subscribers to phone, TV and broadband products, the skinny services from satellite and telecom players come with their own incentives. Little is known about Verizon’s plans in that department as of yet.

The push to reinvent the TV package comes as mounting research shows a steady increase in customers cutting the cord. Earlier this week, an SNL Kagan report said 2 million U.S. homes became broadband-only in 2016, bringing the total to 15.4 million, or 13%, a level the research firm expects to nearly double by 2021.

Overall video subscriber losses, estimated to be 1.7 million in 2016, broke records but still represent just 2% of the cable industry’s total base. Even so, there is a significant level of anxiety about the threat posed by OTT services like Netflix and a sense that the cable business, like the music business, may have gradually alienated consumers by charging too much and innovating too little.