Verizon plans to launch an "over-the-top" digital video broadcasting service by the middle of 2015, CEO Lowell McAdam said Thursday. Speaking at Goldman Sachs' Communacopia conference, McAdam said the service would deliver video content to wireless devices on an a la carte basis.
"No one wants to have 300 channels on your wireless device," McAdam said, according to a transcript of the talk published on the investment information site Seeking Alpha. "We are very focused on probably late first half of 2015 having products like these in the marketplace."
McAdam described how rapid changes in the marketplace have led to new opportunities for both Verizon and video content vendors. That has led to vendors being more willing to "embrace" a relationship with a carrier such as Verizon, he said. Much of that is due to the increasing use of mobile devices for content access of all kinds.
Over-the-top media services use the Internet rather than a service provider's dedicated network to deliver video, audio and other content to end-users.
"We do see that the millennials really want to look at (this) content over the iPads and other tablet devices and their smartphones," McAdam said. "The question is what (does) that transition look like, and...we're dedicated to making this a win-win for the mobile carriers as well as the content providers."
'A Major Transformation'
We reached out to cable industry analyst Jeff Kagan for his take on McAdam's announcement.
"The industry is in flux -- that's an opportunity," Kagan told us. "Verizon...thinks they can do it. It's an interesting idea. I like the guts they have."
With cable TV companies losing customers while streaming providers like Netflix and AT&T's Uverse gain them, the video content provider industry is in "the first half of a major transformation," Kagan said. "It's because of the Internet."
While that means "we might see a lot of Netflixes over the next few years," Kagan said he was surprised to see Verizon attempt to enter the market. "Verizon is one of the companies that you least expect to innovate," he said. "They come to the marketplace last."
Expect More Changes and Acquisitions
Verizon is likely to make some management changes and acquisitions between now and 2015 to pave the way for its proposed video service, Kagan said. He said the company does not yet have all the pieces in place that would be needed for such a service.
McAdam's comments on Thursday aren't the first signs of Verizon's foray into the video content services area, though. In January of this year, Verizon announced that it was buying the rights and assets for Intel's OnCue Cloud TV platform for an undisclosed price.
"The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it," McAdam said at the time, adding that Verizon "already has extensive video content relationships, fixed and wireless delivery networks, and customer relationships in both the home and on mobile."
Late last year, Verizon also reached agreements to acquire content delivery network provider EdgeCast and upLynk's technology for uploading and encoding video content.
"That whole ecosystem...is coming together," McAdam said Thursday. "It's been prime for a while but, as I say, (in) the last six months to a year, the dialog is changing dramatically."