Verizon appears to be sticking to its strategy when it comes to content, with the operator bucking the industry’s vertical merger trend to instead focus on its wireless network and take a partnership approach to content.
On Tuesday’s second-quarter earnings call, Verizon CEO Lowell McAdam said, “We’re not going to be owning content so we’re not going to be competing with other content providers. We’re going to be their best partner from a distribution perspective and I think that makes great sense for the company going forward.”
The company thinks 5G will provide a major opportunity to leverage partnerships.
McAdam said he and incoming Verizon CEO Hans Vestberg travelled to Sun Valley where they met with not only those in industries like healthcare, gaming and education, but also “all of the major content providers,” to showcase improved latency and capacity on 5G networks and that everyone’s eyes lit up about the capabilities.
“It’s our belief that we’re positioned perfectly to have the partnerships we need to be successful,” McAdam said.
On Monday, Bloomberg reported that Verizon is in negotiations to partner with Google or Apple to provide a live streaming TV service when the telecom giant launches its 5G residential broadband service in Los Angeles and Sacramento during the second half of 2018. The report indicated it would utilize Google’s YouTube TV or Apple TV, though the latter hasn’t launched a video service yet. Apple has been lining up original programming and content deals over the last year.
McAdam noted that video is the major driver of traffic seen on the network today and something he only expects to increase over time, however conceded that Verizon is not a fan of linear.
“I’m not trying to criticize anyone else’s strategy here, it’s just the fact of the assets we have and the investments we want to make,” McAdam said. “It’s much better in our view to do digital.”
As for its current pay TV situation, Verizon reported shedding 37,000 net Fios video subscribers in the second quarter, compared to 15,000 in the year-ago period. Unsurprisingly, the loss was attributed to cord-cutting. Verizon added 43,000 broadband subscribers, compared to 49,000 in Q2 2017.
Verizon’s own efforts in mobile video have not previously been met with great success, specifically its failed Go90 video app. Less than three years after launch, Verizon last month announced it would shutter the platform, a move that accounted for much of a $658 million pre-tax product realignment charge the company reported Tuesday.
Go90, along with the company’s other media properties, including AOL and Yahoo, is now housed in Verizon’s Oath unit and integration is on schedule, the company said. McAdam also squashed recent speculation that the Oath media division might be spun out.
“There is no intention of spinning out Oath,” McAdam said. “We are seeing the synergies we expected to see.”
Oath revenue for the second quarter was $1.9 billion, while Verizon’s consolidated revenue was up 2.6 percent to $30.2 billion.
