Week In Review: Verizon Is Launching A Virtual MVPD; Some More Light Shed On Facebook TV

1. Verizon Is Launching A Virtual MVPD

Verizon CEO Lowell McAdam seemed to confirm this week that they were indeed planning to launch a virtual pay-TV service and that service would not be tied in to their not-very-successful Go90 service.There were some noises about how they’d involved AOL and Yahoo in this new deal, but again, it was unclear exactly how that was going down: were they planning to incorporate content from those services? Promote the new service to the thousands of Baby Boomers who still use AOL and Yahoo email? Both? Some sort of ad play? It’s hard to tell.Then there’s the ghost of OnCue, the going-to-change-the-world new pay-TV service that Verizon bought from Intel a couple of years back. We had thought that OnCue was somehow going to power Go90, but that turned out not to be the case. The OnCue team, lead by ex-BBC superstar Erik Huggers seems to be long gone (Huggers himself is now the CEO of Vevo) though the interface, which was rumored to be quite sleek and advanced, could be repurposed for the new service.Why It MattersVerizon is the nation’s largest mobile phone carrier. We suspect they may try and offer this new vMVPD to Verizon mobile customers, with the bonus that any data they use watching the new service is not counted towards their overall data cap. (aka Zero rating.)That’s a huge plus, especially given that Verizon is at the forefront of rolling out 5G service, which should be more than enough to handle video.That in and of itself may eliminate the Achilles Heel of any virtual MVPD: the incumbent broadband provider can easily adjust pricing so that the cost of any outside pay TV service becomes prohibitively expensive. (e.g., broadband + our pay TV service—$75, broadband alone—$100.)  With a 5G line in place, the broadband monopoly may finally be broken.That said, we don’t think the audience for a mobile-only pay-TV service is all that big to begin with, and with more and more virtual services on the market, it gets harder and harder to create meaningful market share.We still believe that the future belongs to MVPDs, that viewers want a simple solution with a single overriding interface (versus an array of apps) and that the TV Everywhere apps from the MVPDs are most likely to provide that sort of functionality. The MVPDs will sell off slimmed down, digital only packages featuring their TVE apps (which will likely include both sports and sports-free versions) and the entire industry will move to a library-based system where everything is available on ad-supported VOD.What You Need To Do About ItIf you’re a network, you’ll want your programming to be available in as many places as possible, so keep yourself open to all these new deals. You’ll only be gaining more viewers. If you’re one of the networks looking to create a sports-free bundle, go for it. There’s definitely a market for it, and if it’s one of the the many flavors of bundle the MVPDs are going to be offering, then there’s no reason not to go for it.If you’re an MVPD, make sure the interface on your TVE apps is up to speed—remember the whole Nordstrom prices for Kmart service conundrum and give your users something that matches the very high price point you’re asking.If you’re the various unions and other people responsible for the tangle of rights issues, work to streamline things. Make it easy for advertisers to buy TV commercials across various delivery systems, especially for linear programming. (In the long run, everyone will profit from that.) 

2. Some More Light Shed On Facebook TV

Like many things Facebook, the makeup of Facebook’s new TV service has been shrouded in mystery. While they’d announced plans for a new free-standing app, no one seemed to know what they were looking to actually to put on it.Now comes news, via Reuters, that Facebook is looking at both short-form (ten by tens) and long-form (20 minutes and up) series. They are said to be willing to pay up to $250,000/episode for their long form TV.While that means no big budget Game of Thrones style series and no big name stars, it’s well within the range of most well-produced network television series, definitely higher production quality than digital video.Why It MattersThis is not all that revolutionary. From what we can tell, Facebook is launching a TV network, complete with all the attendant risks.Not all their shows will be hits. In fact, it’s quite likely most of them will fail. Most network TV shows fail too. Without big budgets and big stars, they’re likely competing with the broadcast networks and cable networks like Bravo, USA, AMC and FX. (That’s assuming they aim adult. They may be competing with Disney Channel and Nick Teen, too.)Regardless, they’re just another player, albeit one with a well-known name, a built-in promotion and distribution system and reams of user data.Whether that will mean they produce more successful shows is anyone’s guess. Entertainment is still a very different game than tech, something few Silicon Valley companies seem to get.It is a decidedly different distribution model from what they’re used to, as well: Facebook usually drives traffic to specific publisher content, making the need to actually visit the site’s home page unnecessary. It seems that with their TV app they’re taking the opposite approach, driving people to their channel and having them pick a show. (Maybe. They may also be planning to drive a lot of traffic directly from in-feed promotions on Facebook. We’ll know soon enough.)Whether or not Facebook succeeds this time out, all it means for the folks at home is more shows to watch, more options for OTT. It doesn’t mean Facebook is taking over television or even that they’ll be very successful at it.At least not yet.What You Need To Do About ItDon’t panic. Wait to see what it is that Facebook is producing. And when. Rumor was they wanted to show things off at the Cannes advertising festival next month and are now looking at sometime this summer.Advertisers: If the shows seem to match your audience, go for it. Even if it’s a marginal match, it could be worth throwing some money at as an experiment.  If not, there’s a whole lot of other TV shows out there to buy.