Virtual cable companies gaining traction in U.S.? Keep an eye on Verizon

Jim O'Neilleditor's corner
Here's a quick pop quiz: What's the difference between ivi.TV's (now paused) online cable play, Microsoft's (NASDAQ: MSFT) rumored Xbox Live TV desires, and Verizon's (NYSE: VZ) thinly veiled attempt to step out of its FiOS TV geographic footprint with the help of its newly announced Verizon Digital Media Services?

The answer?

  • A. Nothing, they all aspire to be "virtual" cable companies
  • B. Cash. Verizon and Microsoft have it, ivi.TV doesn't
  • C. Name recognition. Verizon and Microsoft are more likely to be able to line up networks and content providers (see "B" above.)
  • D. Technology (see "B" above)
  • E. Ivi.TV is little, Microsoft and Verizon are not; it's all about resources
  • F. All of the above

If you answered anything but "F," well, you get an F on the quiz.

Ivi.TV, as you all remember, popped onto the scene last September with an over-the-Internet cable play that charged subscribers $4.99 a month for access to broadcast channels from New York, LA, Chicago and Seattle. The quality was a little iffy, but it allowed me, for example, to watch all of my New York Giant football games here in Michigan each week on my PC. By the end of its run, one insider told me, they had signed up more than 60,000 subscribers. As expected, a U.S. District Court ruling put the kibosh on that operation, dismissing CEO Todd Weavers's assertion that, since he was paying fees to the U.S. Copyright Office he was in line with current laws governing cable operators.

The last couple of weeks have been eventful on the "virtual cable" front.

Rumors that Microsoft was in talks with TV networks about bringing packages of channels to its Xbox Live platform have surfaced anew, giving rise to the usual hand wringing that goes on whenever those rumors begin. And, there are always those who pooh-pooh the idea because Microsoft has never done well when it's ventured into Tinseltown's territory. But, they do have a remarkable platform, albeit a simple one with a less-than-friendly UI in the form of its Xbox 360.

And,of course, there have been rumors about Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) making their plays.

But I'm keeping an eye on Verizon because, of all those companies, it has the most to lose, and the most to gain as consumer behaviors and expectations change vis-à-vis the delivery of premium content. And, because CEO Ivan Seidenberg seems to see that better than any other executive in this space.

Last week at NAB, I met with Verizon to discuss its new Digital Media Service, and we spent a lot of time talking about how consumers would be able to start watching, say, the Masters on their home TV, pause it, hop in a car to the airport where they resumed it and watched it on a tablet or smartphone, and then pause it again with plans to finish watching at their hotel in, say, Vegas. And it would be seamless.

While the Verizon folks I talked with declined to say VDMS would help Verizon move outside its FiOS TV footprint, saying they would be happy to work with other providres, they didn't try too hard to say it wouldn't be an option.

And they shouldn't have, because it's no secret that everybody is working toward that end.

Hulu? They'd love to offer a virtual cable service. Cable TV operators? Ditto. Just look at how widespread Comcast's footprint already is and the work its subsidiary thePlatform is doing with Telstra in Australia. And, of course, you can't discount AT&T (NYSE:T) with its U-verse offering, or the aforementioned Google and Apple.

A virtual cable operator is just a content deal away. I'd still keep an eye on Verizon, because Ivan really gets it.-Jim

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