Verizon Developing Netflix Competitor
Internet Video Outside Traditional Telco Footprint
Back in May we noted
that Verizon was at least considering offering a FiOS branded Internet video service to users outside of the traditional FiOS footprint. Now Reuters
has scooped the news that Verizon is currently in talks with broadcasters to offer the service, which Verizon hopes will directly compete with Netflix. The new service could be rolled out sometime in 2012, according to the news outlet. As with every other service of this kind
, the scope of the offering will be greatly crippled out of broadcaster fear that it will compete with traditional television services and advertisements:
The package of programming would be limited in its scope, said two people with knowledge of the plans. Another person said the focus would be packages of movies similar to Liberty Media's Starz Play and Viacom's Epix or could involve children's programming from a partner such as Walt Disney Co or Viacom. Verizon has been back and forth with programmers over the last two years exploring the possibility. While a lot of the discussion has been around fees, the programmers have also been concerned about the possibility of hurting their existing -- and lucrative -- relationships with the cable operators.
Verizon and Microsoft have also been teaming up to offer live television content to Xbox 360 owners, but the service is only available
if the subscriber has an Xbox Live Gold subscription, and subscribes to both
Verizon FiOS broadband and TV services. This kind of "you can get modern convenience but only if you hold on to your traditional TV subscription" is a heavy-handed (and perhaps futile) attempt to prevent users from leaving traditional TV for Internet video options.
Even if this new service is limited, the offering could expand the Verizon and FiOS brand into additional terrorties where Verizon doesn't compete. That could provide Verizon a marketing beachhead for the inevitable future when telcoTV, satellite and cable operators finally start offering Internet video services outside of their traditional satellite, coaxial, or FTTH/N footprints. Comcast had been considering a similar option, but recently stated they don't see how it can be profitable
Re: Why recreate an existing service?
said by anonynon : I get that, but there are alot of expenses and pitfalls to the process of setting up a new competing service.
because they want ALL the money, not share the money.
Netflix has establihed a good model and has (had, before this summers screwups) a good reputation for service.
I see where MS wants in as they are developing the big screen gaming market, I'm just unsure of the benifit to Verizon
| |said by ITALIAN926:Those are content providers, while netflix is an aggregator/distributor, that's the kind of content netflix could distribute more of, IF they had the backing of a powerful partner like Verizon
Ever heard of HBO, Starz, Showtime, TMC, Cinemax, Epix, Encore?
said by ITALIAN926:bing! In the long run, this isn't about replacing the cable wired to your big screen TV, it's about who distributes to your tablet or cell phone or ???.
Netflix quality is GARBAGE when compared to the HD channels FiOS provides.
Otherwise to pay MS to turn your Xbox into a DVR, and paying verizon for the right to watch it, rather than paying verizon directly for a dedicated box seems foolish.
Re: How is this a Netflix competitor? You have this wrong - you don't need fios to use this service. That's the point here. People on this thread are confusing current FiOS fiber service with what Verizon is proposing here. They're talking of taking their video service and offering it up OUTSIDE their fiber footprint. Imagine running streaming FiOS video service on your Comcast ISP connection.
And because Verizon actually runs a video network, it would give them a leg up on negotiating with content providers over a service like Netflix. For example, Verizon negotiates with Epix on carriage of their linear channels, on their fiber network, today. Netflix doesn't - they don't have such a network. So when Verizon goes to negotiate with Epix to allow streaming of their stuff via this new on-line service, they have some leverage. Content providers are reluctant to allow open streaming of their stuff because they still make a vast majority of their money from traditional distribution - cable and DBS. These service providers pay these content providers based on the number of subscribers. Because these content providers don't want to upset that applecart they're generally pretty reluctant to openly offer up their video feeds to third parties like Netflix. Yes, verizon would be negotiating to allow these feeds outside their traditional distribution network, but because they are also a service provider, they can better negotiate streaming deals with these content providers (Epix won't be slitting its own throat by allowing Verizon to stream their content on-line, e.g.).
I think this has the potential to be a serious challenger to Netflix. Especially if other service providers follow suit.