Verizon's McAdam on Go90: 'It did get a little bit overhyped'

Verizon CEO Lowell McAdam said that the carrier is pleased with the performance of its new Go90 mobile video offering, but he acknowledged that the service has received more publicity than Verizon had intended.

"It did get a little bit overhyped, and we contributed to that to some extent," McAdam said in a keynote appearance at the 44th Annual J.P. Morgan Conference.

McAdam explained that Verizon's strength is in building networks, not necessarily developing popular content. "It's not exactly our strong suit," McAdam conceded.

And that's why Verizon has been inking content partnerships for Go90 with the likes of AwesomenessTV, Hearst, DreamWorks and others. Indeed, Verizon and Hearst recently expanded further into digital content and advertising with their joint acquisition of Complex Media, an online publisher that targets young males. The companies declined to disclose terms of the deal, but The Wall Street Journal reported it values Complex at $250 million to $300 million.

"We want to crawl, walk and then run," in terms of offering quality content through Go90, McAdam said at the J.P. Morgan conference. "Go90 is what we call 'patient money' inside the business. … We knew we were going to have to build slowly in this area."

But McAdam said that Go90's progress so far has reaffirmed Verizon's strategy in the area. "We've seen enough success to make us excited about continuing to work it," he said, adding that Verizon never believed the offering would generate massive revenues initially. "We didn't believe that it was going to move the needle on [Verizon's overall] $130 billion revenue stream overnight. It's one of those things you have to work into."

Added McAdam: "Go90 is in a good spot from our perspective, we're going to continue to pursue it. But our expectations are realistic."

During his comments, Verizon's CEO also acknowledged reports that Verizon continues to be interested in purchasing Yahoo's core internet business as a way to bolster its content ad advertising prowess. He declined to discuss a Verizon purchase of Yahoo specifically, but such a move is a "possibility." Yahoo's auction of its core internet business could see bids in the range of $2 billion to $3 billion, far below previous predictions that the assets would fetch as much as $8 billion, according to a recent report by The Wall Street Journal.

However, McAdam shot down the notion that Verizon might purchase a major network company. "We're not doing that. I don't think we need to do that," he said.

McAdam reiterated the importance of video on Verizon's network. He said that video continues to be the biggest traffic driver on Verizon's mobile network, with mobile video traffic growing 50 percent year over year.

McAdam also pointed to the popularity of Verizon's Custom TV skinny bundle on its FiOS service, noting that Custom TV has accounted for roughly 40 percent of Verizon's video sales. "Customers clearly want that," he noted.

For more:
- see this Verizon webcast

Special Report: Inside the creation of Verizon's Go90

Related articles:
Report: Bids for Yahoo expected to be in the range of $2B to $3B, far below initial expectations
Verizon and Hearst agree to acquire Complex Media, an online publisher that targets young males
Verizon buys 24.5% stake in AwesomenessTV, enlists it to launch mobile programming service for Go90