Verizon Targets Netflix, Cable Companies With Streaming Video Service
Reuters is reporting this afternoon that Verizon is planning to offer its own streaming web video service next year. According to the report, which cited unnamed sources at Verizon, the company is in talks with content providers to work out deals to bring programming from a variety of sources to the service.
Verizon has reportedly been investigating the possibility of such a service for two years, though talks appear to have begun in earnest now. The rumored service would be separate from Verizon’s current FiOS service. The content of the service would likely be somewhat limited, focusing mainly on discrete entertaiment packages.
Though still only a rumor, the report was enough to cause a dip in Netflix’s stock (NFLX) before the close of trading this afternoon. The stock fell 2.82% – $1.98 – to close at $68.44. This is after the video company took a major hit this summer after a series of bad business moves – including a sudden price hike and an aborted attempt to separate the company’s video streaming and DVD shipping services – alienated customers and caused a dangerous drop in stock price.
The report of Verizon’s web video service is particularly interesting in light of the recent acquisition by the company’s wireless arm of 122 spectrum licenses. We reported late last week that Verizon had purchased the enormous block of spectrum – enough to duplicate its 4G/LTE network – from the defunct SpectrumCo, a joint venture of Comcast, Time Warner, and Bright House. As part of the agreement, the companies became agents for one another’s services, a deal which raised speculation that Verizon might be preparing to offer content from Comcast and Time Warner over their wireless broadband network.
How this deal fits with Verizon’s rumored web video service remains unclear. There has been no official comment on the matter from Verizon, but the Reuters report has the feel of a deliberate leak. If so, we should expect an announcement from Verizon at any time in the next few months.