The rapidly growing licensed video market has a new player. Verizon, partnering with Redbox parent company Coinstar (yes, of change-jar-disposal fame), joins Hulu, Netflix, Amazon and HBO GO in a war of business models: subscription versus advertising. But while its start date is set for the second half of the year, Verizon, which has yet to publicly pick sides, could conceivably broaden the streaming ad market.
In the mobile world, Verizon’s advantages are clear: access to users in its stores and on its high-traffic service management website; the ability to block other streaming providers if need be; and its video app Flex View, which lets FiOS subscribers watch movies on their phones or tablets.
But the true test of success will be the number and quality of its content licenses. So far, Verizon, which didn’t announce any partnerships last Monday when it broke news of the partnership, isn’t talking.
Eric Bruno, Verizon’s vp of product management, said licenses are coming, though he declined to say whether they were in place. “We are confident that we will have a very competitive array of content at launch,” Bruno told Adweek. In addition to mobile video, he touted the advantages of DVR management, marketplace apps for impulse purchases and, of course, DVDs provided by Redbox.
The market is currently a bit of a mess in that there’s no one-stop shop. Hulu is currently the only ad-supported TV service (but CBS’ highly rated prime-time content is not among its extensive next-day selections); Netflix has loads of library content and even originals, but little next-day content; Amazon, with the exception of its Kindle Fire, does not put its expensive content licenses on mobile devices; and HBO GO streams only HBO content.
Still, ad industry vets and publishers agree the models have barely scratched the surface.
“This [arena] has enormous growth in it,” News Corp. COO Chase Carey said during last week’s earnings call. “Whether it’s acquired or created, [it’s important to] control as much content as possible.”
Brad Adgate, svp and director of research at Horizon Media, said to expect more ad-supported content as HD-capable tablet devices roll out (starting with the iPad 3, reportedly due next month) and more phone companies upgrade to video-friendly 4G networks. “Gaming and music are going to garner perhaps more dollars in the upcoming year or two,” said Adgate, “but video is going to grow at a faster clip.”
Click here to view more content from The Mobile Issue.