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Verizon Developing Netflix Competitor
Internet Video Outside Traditional Telco Footprint
by Karl Bode 04:17PM Tuesday Dec 06 2011
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:
quote:
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.
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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.

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tshirt
Premium
join:2004-07-11
Snohomish, WA
kudos:5

Why recreate an existing service?

if verizon put some of the money behind netflix they could secure more content, perhaps even enough exclusives to make a Netflix Plus premium tier.

Trimline
Premium
join:2004-10-24
Windermere, FL
Reviews:
·ObiVoice
·Bright House
·Callcentric
·voip.ms

Re: Why recreate an existing service?

said by tshirt:

if verizon put some of the money behind netflix they could secure more content, perhaps even enough exclusives to make a Netflix Plus premium tier.

Agreed. For the life of me, I can't figure out why most cable TV providers, like Bright House, just don't just secondary market Netflix at a premium price. Netflix is 7.99. I would gladly pay Bright House 10.99 to carry the service, eliminating another box.

Just haven't figured out why the execs treat Netflix as a parasitic disease. There is money to be made by both parties.

anonynon

@140.108.1.x

Re: Why recreate an existing service?

because they want ALL the money, not share the money. This is why all the carriers are fighting any service that isn't theirs, and why content providers implement things like Ultraviolet - because they want ALL the money, and not have to share it with a middleman.

tshirt
Premium
join:2004-07-11
Snohomish, WA
kudos:5
Reviews:
·Comcast

Re: Why recreate an existing service?

said by anonynon :

because they want ALL the money, not share the money.

I get that, but there are alot of expenses and pitfalls to the process of setting up a new competing service.
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
medic427

join:2002-01-09
Northport, NY
Here comes the Blocking of Netflix and me dumping the best ISP I ever had.I heard about this on CNET. I was thinking this is so dumb! Then you guys confirmed the stupidity for me. Look at their anytime anywhere Standard Definition movie purchase services. The future not me! Now all the Executives specifically the Mitsubishi exec on Engadget. Most are talking the future is streaming and I personally got VUDU the first day. I am guilty as charged. However, If you read carefully the contract states for Vudu movies and services. That even though I spent a fortune to supposedly "Own" their digital content. In HDX near Blu-Ray quality. It states they can at any time make that content unavailable to me. This is as per the Movie Studio etc. I think this is why they are creating an existing service. One day their will be no Blu-Rays and we will be forced to consistently pay a monthly license fee for all our favorite movies. Per movie or some sort of unfair pricing system.

If you have no choice what are you going to do? Verizon on one side and Vudu being the best quality. VUDU is owned by Walmart and how can you fight Walmart? I have stopped buying from them because who knows what is going to happen. However, one day Netflix can not fight off all these competitors the best I can do is keep all these subscriptions active in the case of Netflix. To fight Verizon's stupid service.

I am really taking shots in the dark here. I am stocking up on my Blu-Rays too. Better than streaming VUDU anyway .

Jason Levine
Premium
join:2001-07-13
USA

Why So Limited

I don't get why they're limiting themselves so much. (Beyond, perhaps, content provider fears.) Why not launch it nationwide and give some incentive for having TV/Internet service as well. Maybe make it a $5 a month upgrade if you have TV and/or Internet from them, but a $10-15 a month service if you don't. This way they could both reach beyond the borders of FIOS and pull more people in who are in FIOS areas but don't have FIOS. I think those people would more than offset the people who drop TV to sign up for this. If each of the cable companies did this, Netflix would have some serious competition.
--
-Jason Levine

ITALIAN926

join:2003-08-16
kudos:2
Reviews:
·Verizon FiOS

Re: Why So Limited

Ever heard of HBO, Starz, Showtime, TMC, Cinemax, Epix, Encore? You dont believe this is "serious competition" to Netflix? Dont you think Verizon makes more than $5 a month offering these channels?

Netflix quality is GARBAGE when compared to the HD channels FiOS provides. Anyone serious into PQ doesnt take Netflix, or any other streaming company serious right now. I tried Netflix for 2 days, I apologized to my Pioneer Kuro every day for a week.

I wish Verizon WOULD put together a streaming service, one that provides 1080p content would be nice. Obviously FiOS could handle it.
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2

Re: Why So Limited

I agree, I would love if they did that.

But then again... why don't the channels & movie companies offer their programming 'direct to customer'? Why do we need Verizon? Well ok, obviously for the Internet connection but for the programming?

Jason Levine
Premium
join:2001-07-13
USA

Re: Why So Limited

The problem would be you would need to subscribe to a dozen different "streaming channels", likely paying a monthly fee to each. Each "channel" would probably have its own quirks (this one only works on Roku, that one's Xbox 360 only, this third one runs on both, this fourth one has their own custom box, etc). It's much better to just have one Streaming Company (or rather a set of competing streaming companies offering similar content) to subscribe to.
--
-Jason Levine
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Why So Limited

You are short sited.

Any content can easily be streamed to and played by any device that is capable of showing video. It is only a matter of encoding/decoding.

The problem is getting the content owners to do it. That is the only thing that makes this impossible to do.

As far as subscriptions go, those content owners can easily work with a "subscription company" that manages what channels any one consumer subscribes to and collects their bills and allocates it accordingly.

This isn't rocket science we are dealing with, just greedy afraid of change ass hats.

Jason Levine
Premium
join:2001-07-13
USA

Re: Why So Limited

It's also a matter of authorization and whether the content owners want their hypothetical streaming service to be accessible in various ways. For each content provider to build their own system, complete with streaming capabilities, billing systems, compatibility with various streaming receivers (e.g. XBox, Roku, etc), would cost them a lot of time and money. Or they could sign up with one company (be it Netflix, Hulu, or someone else) and have their content be available through there.

Content providers have got to look at Netflix and similar companies as one big on-demand system that can be used to reach many more viewers. The more eyeballs that can potentially view your programming, the better.
--
-Jason Levine
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Why So Limited

That is exactly what I am saying.

The reason it is not available has nothing to do with technical or financial reasons, it is not available because they don't want it to be for other short sited reasons.

Another thing that gets me is that the content owners need the distributors to deliver their goods just as much as the distributors need the content owners to make their services needed. Why everything has turned into the Content is king is beyond me. Hopefully, there will come a day that Netflix can tell NBC / Disney / ESPN to kiss off.

tshirt
Premium
join:2004-07-11
Snohomish, WA
kudos:5
Reviews:
·Comcast
said by ITALIAN926:

Ever heard of HBO, Starz, Showtime, TMC, Cinemax, Epix, Encore?

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
said by ITALIAN926:

Netflix quality is GARBAGE when compared to the HD channels FiOS provides.

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 ???.
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.

Jason Levine
Premium
join:2001-07-13
USA

Re: Why So Limited

Well, in the case of HBO, it's the kind of content they would distribute if HBO didn't think that restricting who could see their content made it more valuable.
--
-Jason Levine

Jason Levine
Premium
join:2001-07-13
USA
I don't have any problem with the quality of the Netflix streams. Then again, we only recently got a HDTV (when one of our SDTVs died). Our main TV's still SD so HD quality isn't too important to us.

As for HBO, Starz, Showtime, etc, I don't count them as Netflix competition. You need to first subscribe to cable and *THEN* pay for the premium channels... one at a time. And their content is on when they decide to air it. Yes, you can DVR it, but you still can't jump into the middle of a series and watch it from the beginning. Now if those channels pooled together and served their content via the Internet without requiring a cable subscription, *that* would be a competitor to Netflix.

I hope someone comes along with a competitor because I think much of Netflix's recent woes stem from them thinking they own this space and can do whatever they want. If they have competition, they'll be forced to improve their service or else and the customers will be the ones that win.
--
-Jason Levine
Expand your moderator at work
ksalper

join:2002-11-15
West Orange, NJ

It'll probably be low-def only, though.

And when subscribers ask when high-def content will be added, they'll be told it's in the queue, behind more Spanish movies.

88615298
Premium
join:2004-07-28
West Tenness

How is this a Netflix competitor?

A) You need fios TV to use it. That means at most 4 million users for this service?

B) If all it's doing is basically recreating the TV service with far fewer channels how is that a Netflix competitor?

If Verizon offered this to everyone it could comptet. Not as a Netflix competitor but as a competitor to other cable services.

I'm not sure why every streaming video service is suddenly a "competitor" to Netflix when clearly most of them are apples and oranges. The only thing close to being a competitor is Amazon Prime. It's biggest issues are the amount of content, lack of availability on devices and the fact you have to make a one time payment of $80. With Netflix if I decide after 2 months it's not worth it I'm out $16. Amazon Prime you're out $80.
JPL
Premium
join:2007-04-04
Downingtown, PA
kudos:4

1 edit

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.

TPoise
.NET Superstar

join:2006-07-03
united state

HBO Go is still the bigger competitor to NFLX

HBO is the biggest competitor to Netflix because they can own the entire chain of the production house, direct contracts with the actors/screenwriters, the content itself ("Strike Back" for example), and now the means to distribute it to several devices through HBO Go. And in cases where they don't the content directly, they have very good licensing terms to distribute other contents to their normal TV channels as well as through HBO Go.

NFLX is trying to come up with their own original content but its struggling to do so. I'd personally prefer to see them revive shows that had a strong following (Jericho, The Event, FlashForward, etc.) than pay a few billion to content distributors for decades-old episodes to some reality TV show.

fldiver2011

@comcast.net

Re: HBO Go is still the bigger competitor to NFLX

I think you seriously overrate HBO. I discontinued my service with them years ago, and just for kicks ever so often I look and see what they offer..hilarious, the same movies I already have in-house; certainly nothing worth the $15.00/mth they demand. Anything they might have series wise I can buy on disc. And discs aren't going anywhere anytime soon. The reality is there are plenty of people that could care less about on-line streaming.