Verizon is touting the plan as giving customers the flexibility to choose just what they want to watch. In reality, Verizon is trying to come up with a plan that will entice consumers who have never paid for a cable or satellite subscription to sign up. Including 25 Mbps Internet service, customers can get the “Double Play” bundle for $65 a month.
Verizon is being forced to test out a new ways of obtaining and keeping its FiOS customers in the face of competition from Dish Network Corp. (NASDAQ: DISH) and its Sling TV basic offering for $20 a month plus add-on genre packs for $5. The Sling TV deal does not include monthly Internet service.
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Cable TV providers like Comcast Corp. (NASDAQ: CMCSA) are also offering lower-priced alternatives to the pay-TV bundles that have been the industry standard for decades now. Some content companies, like Time Warner Inc.’s (NYSE: TWX) HBO, are lining up to offer a stand-alone subscription to a streaming version of their programming.
Verizon’s new plan remains a long way from the a la carte programming many consumers and consumer advocate groups have demanded, but it heightens the threat that the pay-TV providers have felt from streaming video providers like Netflix Inc. (NASDAQ: NFLX) and Google Inc.’s (NASDAQ: GOOGL) YouTube.
Verizon has somehow persuaded some content providers to split up bundles that the companies have never been willing to divide before. Walt Disney Co. (NYSE: DIS), for example, has agreed to allow its ESPN networks to be sold separately from its Disney Channel.
Verizon, the cable and satellite providers and the content producers all see the world of pay TV changing. Every company wants to maintain its revenues and profits while changing its business model to give consumers what they want. That may be impossible, but consumers — especially the millennials — who have never had a pay-TV subscription or who have already cut the cord will have to be sweet-talked (with cash) into signing up for a subscription that they have apparently lived without. That’s a tough and costly sale.
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