Verizon (NYSE: VZ) will continue to sell its FiOS linear video product to consumers but the company is also ramping up its Go90 mobile video service and its skinny bundle packages to accommodate the rapid growth in consumers looking to ditch their linear service in favor of over-the-top services.
Speaking at the Goldman Sachs 24th Annual Communacopia Conference, Verizon CEO Lowell McAdam acknowledged that while the company is a top 5 pay-TV provider with its FiOS video service, it realizes that it has to innovate or it will lose customers. "If you don't disrupt yourself, someone else will disrupt you," McAdam said.
He said that's why the company is developing skinny bundles and launching its Go90 video service.
Regarding the skinny bundles, McAdam acknowledged that many content companies are not happy with Verizon's efforts to break their model of bundling several channels together in order to get distributors to buy less desirable channels in addition to highly popular channels. When asked about Disney's ESPN lawsuit against Verizon, in which Disney claims that having its flagship channel relegated to a sports add-on package is a violation of its FiOS licensing deal, McAdam said he couldn't comment on the specifics of the lawsuit but said that he believes the two companies can work through this. He added that ESPN is part of the Go90 service. "The partnership is still there," he said.
McAdam did provide some further insight into its Go90 mobile-first video product, noting that the service currently has 25,000 customers and will go live at the end of the month. The company has sent invitations for the service to more than 5 million Verizon Wireless customers.
Go90, which is targeted at millennials, will work in part over Verizon's LTE Multicast technology, which makes mobile video transmissions more network-efficient. McAdam said the service will offer a variety of types of content, including sports programming and original content from some top studios, as well as episodic content that will bring viewers back to the service.
The Go90 service will be monetized through a variety of models, including an ad model that will allow companies to insert targeted ads that will be delivered to specific viewers based upon their demographics and viewing habits. Verizon also plans to move existing customers to larger data bundles to accommodate their viewing.
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