Verizons announcement of a mobile-first Netflix-like service for live and on-demand programming will appeal to advertisers, but bringing in the growing cadre of young cord-cutters could be a tougher sell.
The company said this week that it is readying a mobile-first video product that will launch in the United States this summer and be supported by ads. While advertisers are expected to subsidize some of the cost, consumers could be asked to pay a monthly fee, something that may not appeal to consumers increasingly used to a la carte offerings.
Advertisers will be very much onboard, said Damon Ragusa, CEO of ThinkVine. Video is a growing area and marketers will get strength of TV advertising with the rates of digital.
Consumers are looking for new avenues to access content and they are settling into habits, he said. Consumers want to be able to choose what they want and only pay for that that is the model that is emerging.
Expecting to get $10 a month from a consumer for mobile video, it has to come with a different set of circumstances than what they are providing. That is going to be their biggest challenge.
Scaling up on video
Verizons new mobile video service could simply be a way for the company to test the underlying technology as it continues to try to scale up on video in recognition of the critical role it will play on mobile going forward, per Mr. Ragusa.
The OTT service was announced as part of the closing of Verizons acquisition of AOL, with the latters CEO Tim Armstrong becoming the head of Verizon Digital Media Services. AOLs advertising technology is expected to play an important role in the monetization of the new video product.
The idea for Verizons new service, which the company is referring to a mobile-first video product - is that users will be able to watch TV from whatever device they prefer which increasingly means mobile. The company is promising live and
Verizon also said that ad-sponsored data will be part of the product.
Verizon bought AOL for its online video advertising tech platform, intending to lean into the emerging opportunities it sees in ad-supported OTT video, especially on mobile devices, said Carl Spaulding, executive vice president of client consulting at Nielsen Catalina Solutions. NCS thinks of ad-supported OTT video as the next generation, scalable digital successor to Addressable TV, as currently offered by Dish, DirecTV, Comcast and other MVPDs.
With its millions of wireless subscribers, Verizon will be able to leverage its first party subscriber data to greatly extend the reach of online video advertising to audience segments beyond what can be accomplished via cookie and probabilistic device ID matches, he said.
Sponsored data is an idea that is already being explored by AT&T, which launched a program at the beginning of 2014 but has not seen a lot of interest from marketers (see story).
As the demand grows on mobile for data-heavy content such as video, consumers are increasingly uninterested in paying for data, forcing carriers to look for alternative options.
AT&Ts program has not gained a lot of traction with advertisers to date.
A sponsored-data campaign from Hershey's on AT&T.
There is some question as to whether ad-sponsored data violates the Federal Communications Commissions net neutrality rules. Verizon expressed the opinion this week that it believes this model does not run afoul of net neutrality.
The next battlefront
Verizons service will work over Verizons own Wi-Fi and wireless networks as well as those of its competitors, with some features exclusive to Verizon customers.
While marketers are likely to find the new service appealing, they will also be keeping a close eye on how many users it attracts.
While there is an abundance of targeted mobile video available to brands today, quality programmatic mobile video is limited, said Michael Collins, CEO of Adelphic. If Verizon is able to build a large audience for this service and chooses to make the ad inventory available to DSPs, the demand among brands could be significant.
With the Verizon, AOL deal now closed, the industry will be closely watching what happens when AT&Ts merger with DirecTV is finalized.
This will be a game changer for AT&T in its ability to transition from traditional linear TV to OTT viewed online, Mr. Spaulding said. With DirecTV, AT&T can offer Addressable TV to advertisers immediately, and follow-on with the launch of its new ad-supported video streaming service for mobile devices, to compete with Dish Networks Sling TV, the new Verizon-AOL offering, and eventually probably Apple.
Chantal Tode is senior editor on Mobile Marketer, New York
News Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at email@example.com.