Verizon (NYSE: VZ) CFO Fran Shammo said that the carrier continues to see interest among customers for its Custom TV skinny bundle. But he said the carrier's new Custom TV customers are not sports fans.
"One of the disappointments was that, when you do Custom TV, you get a basic package and you get to pick two other packages. We thought people would pick three. People are only picking two," Shammo said today during an investor event. "And what we're seeing is, they're picking more of the non-sports two, than sports. So the people who are going to Custom TV are generally people who do not watch a lot of sports. So that was kind of an insight that we didn't have before."
Verizon launched its Custom TV packages earlier this year. The controversial bundling system allows subscribers to buy a package of 35 basic cable and broadcast channels for $54.99, then choose between two of seven add-on packages of networks themed around "sports," "kids," "news," and more. Disney's ESPN sued Verizon over the offering, claiming that having its flagship channel relegated to a sports add-on package is a violation of its FiOS licensing deal.
Interestingly, Shammo also hinted that next year Verizon would tweak the channels that are available through its Custom TV skinny bundle.
"We also said that this was a runway, that we knew that this was not a forever runway, because of some other contractual agreements that we have with our content providers," Shammo said. "So you'll see some changes coming into 2016 around Custom TV because we'll have to do that, to rebundle if you will. But today it's been very successful for us."
Shammo did not provide any further details on the carrier's content plans for Custom TV.
Overall, Shammo said Verizon continues to see about a third of its pay-TV customers opting for the Custom TV skinny bundle. "They only want what they want," Shammo said of the product, noting that it allows users to pay for only the programming they wish to view.
In other Verizon video news, Shammo said that Verizon is now ramping up its advertising for its new Go90 mobile video product. Go90 is a mobile app for iOS and Android smartphones that offers select content from a variety of sources including established media players, newer Internet content providers and some sports content.
"We're pretty pleased with what we're seeing" with Go90, Shammo said. He explained that the company was disappointed with the search function on Go90, but recently introduced an improved search capability that Shammo said performed better. He said that Go90 users are currently mostly viewing the content that is exclusive to the platform.
Shammo also offered his clearest comments yet on Verizon's business model for Go90. Currently the service is free to access and contains some advertisements. Shammo said that, sometime in the future, Verizon would add a "sponsored data" option to Go90, which would allow advertisers to make select video from Go90 free for Verizon's wireless customers to access. (AT&T (NYSE: T) currently offers a similar service with its Sponsored Data offering.)
Shammo also said that Go90 would begin offering pay-per-view options using Verizon's LTE Multicast technology. He said the carrier's current agreement with the NFL supports that PPV model in Go90.
And Shammo said Go90 would also offer premium content that "you may have to pay an access charge" to view.
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