McAdam: Verizon OTT Product Coming in Second Half

Verizon Chief Says Product Would Likely Be 20-30 Channel Offering

Verizon Communications chairman and CEO Lowell McAdam said the telecom giant’s planned over the top video offering will likely debut in the second half of the year, and would probably be a 20-30 channel package initially available on mobile-only.

McAdam said at the Citigroup Internet, Media & Telecommunications Conference in Las Vegas Tuesday that programmers like CBS and Time Warner began to realize last year that millennial viewers don’t want to pay for “300 channels they have to sit in front of their TVs at 8 o’clock to watch.” While McAdam wouldn’t give details on what networks his OTT product would include, he added that like Dish Network’s recently announced Sling TV, it will have significantly fewer channels than a standard cable offering.

 “We’re very happy with the way content is moving,” McAdam said at the conference. “That’s not to say that every show is going to be available over the top, but I’ll tell you it’s not going to be a 300 channel offering any way, it’s probably going to be a 20 to 30 channel offering.”

McAdam added that the service will be available strictly on mobile devices to begin with and that the telco has secured the necessary rights for networks through the normal course of content negotiations for its FiOS TV wireline video product.

Verizon started the OTT ball rolling last year when it purchased Intel Media’s OnCue online video assets.  Intel had dropped out of the OTT race because of what it called the prohibitive cost of programming. But like Dish, Verizon’s traditional pay TV service helped grease the skids for OTT rights. In addition to OnCue, Verizon earlier purchased content delivery company EdgeCast and upLynk, a startup that developed a multiscreen video publishing platform that powers authenticated apps like Watch Disney and Watch ABC.

“We’re confident that by the second half of 2015, we’ll have a nice product set out there,” McAdam said.

But McAdam said the OTT service doesn’t necessarily mean Verizon needs to gain scale in linear content.

"I think you take the cues for that out of where the market is going," McAdam said. "Whatever you read about millennials, it’s not linear, and it’s not broadcast. They want to see what they want to see from whatever source and mostly that’s digital media versus the linear broadcast. I don’t think we need to be in that space. We may dabble in it, that’s not to say that other strategies are incorrect, but given the assets we have I think that is the right approach.”

The Verizon chief also tried to quash speculation that Verizon was looking to acquire online giant AOL, adding that the telco will likely focus more on partnering with companies rather than buying them.

McAdam said that like other media companies, AOL is a potential partner, but “to say we’re having significant acquisition discussions with them is really not accurate.”