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Verizon to be the bully on the OTT block


Published: 9 February, 2012


The fact that US telco Verizon has partnered, and owns the majority of, a new streaming video venture in partnership with US DVD kiosk business Redbox, has immediately been seen as a reason to point "I told you so" fingers at Netflix. Does Redbox plus Verizon add up to something more than Netflix? People have asked.

While it may or may not, what seems to us to be important is just how many businesses - now including significant current generation giants - are now backing Over The Top video, and this represent a challenge to existing pay TV.

Netflix on its own may never have convinced anyone to cut the cord from their beloved cable TV - but Netflix, Redbox, Verizon, Hulu Plus, Blockbuster and Amazon, Apple and Google between them are starting to look like a serious new set of players in a major new business area, that of bringing TV not just over the internet into the home, but into the sitting room, and the TV set itself. If we add content libraries of major TV producers, such as Samsung, Sony and LG, then we have the beginnings of a new industry, effectively an alternate from existing pay TV services.

Because most of these businesses don't own infrastructure (except Verizon, which is trying to put its existing infrastructure to a better use, and anyway its new joint venture owns none) they can offer content for what it is worth, less the marketing costs, the internet delivery costs which are meager, and keep back a little for profit. The cable companies have to use the money to constantly upgrade their plant. The result are services which cost under $10 a month each, which will collectively go up against pay TV businesses which have average monthly consumer ARPU in excess of $100 each.

The industry has to go through a massive disruption where content payments go down, and broadband gets capped and charges reasonable extra payments for video streaming use.

And that disruption will not be easy on anyone. Verizon is showing here that it is prepared to throw its hat in the ring alongside the younger internet based businesses and it's not content to side with people that don't think OTT will happen or who believe they can ignore it. And with Verizon backing OTT, it will happen sooner rather than later. For a 2,500 word analysis for this story go to and ask for a FREE trial to Faultline.


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