Streaming video to mobile devices is not especially new, nor is allowing pay-TV subscribers to watch a video on a mobile device that they pay for through a satellite or cable subscription. What is different about the Go90 mobile app from Verizon Communications Inc. (NYSE: VZ) is that video viewing is ad-supported and does not require a subscription to any pay-TV provider.
The telecom giant is expected to launch the Go90 app Tuesday to a picked list of subscribers, most of whom are expected to be millennials because this is the group that is least likely to sign up for a full-tilt pay-TV package. A report from Reuters notes that Verizon is expected to launch the app to all its customers later this month.
The free video service plans to drive revenue through advertising and data usage. Go90 launches with about 100 to 200 hours of exclusive video content from online networks like AwesomenessTV and Machinima. The New York Times reported that rather than including all the programming available from networks like the Comedy Channel, the Food Network and ESPN, Go90 will include popular shows from those and other channels, including the NFL Network, with which Verizon has a deal to stream some live games.
Verizon’s $4.4 billion purchase of AOL was the telecom company’s first step into the content and advertising business. Last week Verizon paid $425 million to acquire Millennial Media Inc. (NYSE: MM) to beef up its ability to combine its data on customers, AOL’s advertising and ad-sales software, and Millennial’s access mobile ad inventory. If this sounds like a play against Facebook and Google, that’s because it is.
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How smart that play is may be arguable. Verizon continues to pay down the debt it took on to acquire all of Verizon Wireless from Deutsche Telekom for some $100 billion or so. It cannot afford to cast a wider net for revenue in the same way that AT&T did when it spent around $48 billion on DirecTV, so it is trying to get into the content game with AOL, Millennial Media and online networks. It could work, but competing with Facebook and Google for eyeballs and mobile ad revenue is a perilous choice.
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