Report: Verizon's Pivot Into Media is Slow Going & Risky Verizon's shift from broadband into the content and advertising industry will be a glacial-affair and comes with significant risk, notes Barclays. With both wireless and fixed broadband growth slowing, Verizon recently acquired AOL and Yahoo in the hopes of becoming a major player in the media and ad space. But the company's Yahoo deal arrived with significant baggage in the form of an undisclosed hack and an domestic surveillance scandal.

Meanwhile, Verizon's attempt to create a new streaming video service targeting Millennials has been a huge "dud" according to Verizon's own business partners. A new report by Barclays argues that Verizon's grand strategy could still pay off, but it will be a slow uphill climb -- and still faces a significant risk of implosion. “Although MediaCo will likely face tough competition and high execution risk, in the mid-term we believe its strategy can still benefit from a large and growing digital ad market, even if it remains in a distant third position,” Barclays said. “That being said, the initiative is unlikely to drive a material financial benefit for several years and still comes with high execution/adoption risk. Thus we believe its strategy bears monitoring as the divergent video/media strategies of all distributors—all still unproven—will clearly drive meaningful longer-term competitive implications.” Wall Street doesn't appear to notice that, after being a pampered telecom duopoly for the better part of a generation, Verizon just isn't all that good at innovation and disruption, especially in the content and media space. You'll recall the company's first foray into media (Sugarstring) was a bit of an embarrassment, after Verizon was caught informing writers they couldn't write about net neutrality or domestic surveillance (both issues Verizon consistently finds itself at the center of). Verizon's history is also littered with similar failures, from its streaming joint-venture with Red Box, to the company's attempt to build and operate its own app store. To succeed in media and advertising, Verizon's going to need to shed a significant amount of its anti-competitive, duopoly DNA -- given it has spent the lion's share of the last thirty years primarily focused on lobbying and turf protection for its legacy broadband business. Verizon's history is also littered with similar failures, from its streaming joint-venture with Red Box, to the company's attempt to build and operate its own app store. To succeed in media and advertising, Verizon's going to need to shed a significant amount of its anti-competitive, duopoly DNA -- given it has spent the lion's share of the last thirty years primarily focused on lobbying and turf protection for its legacy broadband business.







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Most recommended from 15 comments



karlmarx

join:2006-09-18

Moscow, ID 13 recommendations karlmarx Member Verizon is starting it's death throes I've said it in the past, and I'll say it again. Verizon collapsing has no-one to blame but themselves. They apparently don't want to invest in 'fixed line' internet, that's why they sold off their DSL and FIOS to whomever would buy them. They threw ALL their eggs into wireless, because at the time, it provided the highest level of short term gains. Now that their wireless has tapered off, and can no longer work as a 'cash cow' for them, they are desperate to find something, anything to keep their wireless relevant. They will fail. Period. Go90 was a huge waste of money, as I predicted when it was first launched. Buying yahoo and AOL again are going to be massive cash drains. Verizon's executives are the problem. They keep looking for the 'next quarter' results, instead of investing long term. Long term, their best bet WAS FIOS. Now that's going away. DSL is dying, they gave up on that. The only thing that generates revenue for them is wireless, and even though they are one of the most expensive, they are no longer 'the best'.

What this means, that in 4-5 years, Verizon, as it exists today, will cease to exist. Shareholders are going to bail as soon as the quarter over quarter revenue stops growing. Shareholders are going to bail even faster when the realize verizon doesn't have a plan. I predict in 5 years, verizon will be a 2nd tier wireless company, with no real assets or growth potential left. And it's all because the fat cats are too focused on 'next quarter' to invest long term (like they should have with FIOS). Fios is basically future proof, and yes, it won't get them the massive 'profits' they see from wireless, but it will allow the company to survive. Everything Verizon does now is 'throw it all at the wall to see what sticks'. That's no way to run a business, and they will pay the price for their own hubris.

telcodad

MVM

join:2011-09-16

Lincroft, NJ 3 recommendations telcodad MVM Things not "humming" along for Verizon either. I also see that Verizon is making another major advertising push lately for their connected-car service "Hum" (» Verizon Quietly Lowers Price on 'Hum' In-Car Service [26] comments ), which appears to be achieving a similar level of "success."