Sept. 22--As shows like "House of Cards" and "Orange is the New Black" on Netflix take off like wildfire, the executives at Verizon have done some long, hard soul-searching over an existential question.
How does some upstart like Netflix gain so much attention, (and 37 million streaming video customers) when Verizon has a monster-sized library of 15,000-plus video-on-demand titles? Especially when so many of Verizon's own subscribers use their Verizon broadband to skip over Verizon's own video library to watch shows on Netflix, Amazon, Hulu, Apple, Vudu, Boxee, Roku and other so-called "Over The Top" (OTT) streaming services?
Joe Lawson is Verizon's director of video content strategy, and he's been in the video-on-demand business since the 1980s, when cable companies had "remote" control boxes with wires connecting to the set-top box. He and I spoke last week, and I asked what was his favorite show. Besides Game of Thrones on HBO, he made something of a confession.
"House of Cards on Netflix," he said.
Yikes. "Isn't Netflix almost a four-letter word at Verizon?" I asked him.
"The best thing we can possibly be is honest with ourselves in terms of what's happening," he said. "OTT providers have hit on something people are responding to."
Verizon officials spent several billion dollars to dig fiber-optic lines that serve millions of U.S. homes, so they're not about to just let some pesky upstarts steal their lunch. So Lawson is helping Verizon fight back.
First, Verizon is tackling one tough problem: It has tons of TV shows and movies, but people often perceive video on demand as either expensive or hard to use. So Verizon is putting more titles up for free for binge weekends. For instance, Verizon made more than 5,000 movies in its library free from Sept. 18 through the 22nd, including "James Bond: Skyfall," "Argo" and "Brave." Expect more movie giveaways like that in the year ahead.
Second, Verizon wants to entice people who came into a TV series mid-way, so it's cutting special deals with producers to put whole seasons of shows up at once for binge viewing weeks, including HBO's "Boardwalk Empire" and A&E's "Duck Dynasty," which apparently is the highest-rated non-scripted TV show around. (Quack, quack.)
One advantage Verizon has is relationships with premium channels like HBO and Showtime that enable it to acquire titles that might take a year to appear on Netflix or Amazon.
The idea is to tell Netflix users and TV binge viewers, "Hey, since you already have Verizon, why not watch some top-tier shows right here?"
Verizon has good reason to court Over The Top viewers.
When Verizon conducted a study of subscribers and asked how they watch full-length TV shows, just 38 percent said "live," with the rest watching shows on DVR, on demand and using online sources and DVDs. That means live TV has already become a marginal activity, and I dare say it is approaching a quaint niche. Though the Verizon study didn't detail which shows people watch live, I wonder if that's basically sports -- either live, or on DVR an hour after a game started so you can skip commercials.
Three years ago, when I first wrote about people watching Internet videos on their TVs, it took me weeks to find a single person in Tampa Bay who was doing it, and that was an I.T. help desk guy. (That's part of my job as a trend-watcher -- looking for the bleeding edge stuff.) But now, I don't know anyone under 30 who actually pays for cable TV. A friend in the newsroom has a 20-something sports nut son who chuckles when asked how he watches the Buccaneers on Sundays. "Dad," he said. "You can find anything online." Take that, ESPN/Fox/CBS.
Cable companies have plenty of other risks on the horizon. The upstart Aereo.com service should soon start up in more U.S. markets, offering people a way to skip over cable and watch any of their favorite local broadcast TV shows -- like the local news or daytime talk.