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Verizon Backs Away From Creating OTT Subscription Video Service

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The industry can stop waiting for Verizon to announce its own subscription over-the-top (OTT) video play. Speaking to Yahoo Finance, Verizon CEO Lowell McAdam said his company will focus on partnering with an existing OTT provider rather than building its own service from scratch. This is one of the first signs that the nascent OTT market is already saturated. 

By partnering, McAdam says his company can focus on doing what it does well, while working with an OTT partner that knows how to create a video offering. Verizon's unit Oath runs AOL and Yahoo, both of which create original online video properties. The partnership McAdams envisions would create something new by mixing that original content with more traditional linear programming. He stopped short of announcing a partnership, but said he expects to have news in Q4.

In StreamingMedia.com's State of Media and Entertainment 2018 feature, Joel Espelien, a senior advisor with The Diffusion Group, noted that Verizon was the big fish he was waiting to make an OTT announcement. But Verizon has turned away from creating its own service and Espelien thinks that's a smart move:

"This is a good decision on Verizon's part," he said. "There are too many linear OTT services as it is, and some of them are not going to make it longer term. Remember, most of these services are losing money on every subscriber if all costs are well and truly allocated. The skinny bundle market faces the problem of being too big to fail, but too small to succeed. Verizon entering would have just made things that much worse for everyone, including them."

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