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Verizon chases Netflix ‘over the top’ with new video service

Pras Subramanian

Netflix (NFLX). Amazon Prime Video (AMZN). Hulu. Now add Verizon (VZ) to the list.

Yesterday at an investor conference, Verizon CEO Lowell McAdam revealed his company could launch a digital video service over the internet, or “over the top” as it’s referred to, by the middle of 2015. Needless to say this is starting to become something of a crowded space.

Not surprisingly, Verizon has much of the technology and equipment in place to launch such a service. McAdam also said the company was nearing deals with media companies to obtain rights to stream their content, typically one of the big stumbling blocks in creating any kind of new streaming service.

“We don’t really need one [more service], but why not?” Mike Santoli opines in the attached video. “You have 70 million cable households that pay for a huge bundle of packaged programming. Theoretically that’s the potential market for these over the top services.”

An over the top service by Verizon makes sense, but it also has one big key differentiator, Santoli notes. “Basically Verizon is saying, ‘we have the network capacity, we have the ability to negotiate with content partners’ because they have their own FIOS network, so they kind of have all the things in place… Livestreaming programs at least on a limited basis are going to be the thing that differentiates [this service].”

With broadcasters starting to warm up to the concept of livestreaming of linear TV, Verizon and other streaming services stand to benefit. Other broadcasters, notably Disney (DIS), are still espousing the value of cable bundle “deals," where customers are paying recurring fees for channels, many of which they do not want.

In terms of other streaming deals, Santoli notes Fox’s (FOXA) deal with Netflix streams shows a year after airing, so the industry is starting to see some budging from broadcasters to work with streaming services not named Hulu, albeit slowly. “Essentially [these deals] are an alternative to the syndication market, I think it’s kind of a mashup of everything here, we just don’t know how exactly it’s going to develop.”

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