Is Verizon Considering Online TV Streaming Service Launch?
U.S. telecom giant Verizon Communications Inc. VZ is likely to start an online TV streaming service this summer, according to a recent Bloomberg report. The company has decided to come up with dozens of channels nationwide for the new service. Management is currently negotiating with several TV network owners to secure online streaming rights.
Notably, Verizon offers fiber-optic based FiOS TV services to residential customers. This service is similar to that of cable TV operator’s traditional video offerings. In 2015, the company launched go90, a YouTube-like streaming-video service aimed at teenagers. However, the new online streaming video service will be separate from the previous two offerings as it will compete with established low-cost streaming video services like Netflix Inc. NFLX and Amazon.com Inc.’s AMZN Prime video.
Internet TV is gradually gaining market traction in the U.S. Of late, the legacy pay-TV industry in the country has been facing severe competition from online video streaming service providers. The low-cost over-the-top video streaming service has resulted in massive cord cutting that is currently threatening the pay-TV business model. Internet TV has emerged as a strong alternative to counter this competitive threat.
Last year, Verizon’s closest rival AT&T Inc. T had launched its online TV streaming service - DirecTV Now. Satellite TV operators DISH Network Corp. DISH offers a similar kind of product called - Sling TV. Moreover, Comcast Corp. CMCSA – the largest cable multi service operator in the U.S. and a media giant - is considering a strategic decision to rebrand its existing TV streaming service “Stream”, to make it available across its footprint. The new service called - Xfinity Instant TV - is expected to start in the third quarter of 2017.
Price performance of Verizon
Year to date, the stock price of Verizon has witnessed a negative growth of 8.09%, wider than the Zacks categorized U.S National Wireless industry’s negative growth rate of 3.34%.
Nevertheless, Verizon has a very powerful diversified business model. In the wireless front, it will start initial deployment of the upcoming 5G network in 2018 while on the wireline front, the company is aggressively expanding fiber-based footprint. In the digital media front, Verizon has become a major contender for the lucrative online advertisement business. We believe these are primary reasons behind the stock currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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