LAS VEGAS – Seeking to find a new competitive edge in the emerging multi-screen video market, three leading U.S. telcos are turning to over-the-top (OTT) video and/or TV apps to attract new video customers and keep existing ones from churning out.
Speaking at the TelcoTV show here last week, senior executives from Verizon Communications, AT&T and Windstream Communications discussed how they’re embracing streaming video services and on-screen apps to maintain their video subscription growth. They also emphasized the importance of delivering more customized, easy-to-use services to keep subscribers glued to their home TV sets.
In one of the boldest moves, Verizon is developing a streaming video and DVD rental subscription service with Redbox Automated Retail, the DVD kiosk company. The two partners, who have started testing the streaming and DVD rental service, intend to launch it commercially before the end of the year, said Robert Mudge, VP of Consumer and Mass Business for Verizon.
"We will be in the market in the fourth quarter,” Mudge said. “Quite frankly, this has been a heavy lift."
Mudge said the telco will offer the service, known as Redbox by Verizon, as a standalone subscription product to any U.S. consumer with a broadband connection, enabling it to compete directly with Netflix. “It’s a prudent step,” he said. “We’re giving our customers what they’re asking for at a price they want.” Verizon and Redbox have not yet revealed what they will charge for the service.
The pact with Redbox is part of Verizon’s broader strategy to respond to the rise of the “borderless lifestyle,” according to Mudge. Under this strategy, the company is aiming to enable dozens of video apps and services to all devices, no matter where they are, through a mix of wired and wireless networks. Mudge shared some new consumer research findings indicating that 39% of U.S. adults, many of them upscale, already fit into this "borderless" demographic group.
While Verizon is teaming with Redbox, Windstream Communications is working with Roku, a device maker whose box turns any TV into a web-connected screen. Windstream CEO Jeff Gardner said his company’s new OTT video service with Roku has performed so well since its March launch that Windstream officials are now thinking about developing a new device for it.
“The adoption rate has been very good,” Gardner said, without revealing any subscriber figures for the new Merge service. “We have plans to build on this platform.”
With Merge, Windstream, which operates in every U.S. state except Alaska and Hawaii, installs a Roku streaming video box in the homes of DSL subscribers. Customers can then subscribe to customized Web streaming video packages, including such premium services as Netflix and Hulu Plus, on top of their basic broadband service.
Gardner said the service is meant to appeal to “young techies” not attracted to Windstream’s more traditional pay TV offering with satellite provider Dish Network. “We wanted to carve out our own path here,” he said. “We didn’t want to do a me-too approach.” Gardener said the telco is also looking at developing a more Windstream-specific box along with Roku.
Maria Dillard, VP of U-verse and Video products for AT&T. said her company is also seeing multi-screen video viewing habits develop among its U-verse TV subscribers. She cited consumer research indicating that 65% to 70% of U-verse customers with secondary video devices use those devices several times a week while watching TV at home. “We do see OTT content coming in and customers engaging outside the TV,” she said.
In response, AT&T has been developing more than 30 TV apps for U-verse that use or sync up with tablets, smartphones and other companion devices. Some sample U-verse apps include a Facebook integration and personalized "Multiview" mosaics that show the feeds of several live TV shows at once. AT&T has also developed a Multiview version for Chicago Cubs games that lets baseball fans watch the action from multiple camera angles.
Further, AT&T is encouraging third-party development of TV apps through an API program, Dillard said. One of the newer "U-verse-enabled" apps to emerge from that effort is TwonkyBeam, which lets users snatch Web video from a tablet or smartphone and "beam" it wirelessly to the TV. "Driving the customer engagement is what this is all about," Dillard said. She noted that service providers must keep these applications simple and easy to use to spur customer adoption.
Dillard also touted AT&T’s growing deployment of wireless TV receivers in U-verse homes. Based on 802.11n technology, the receivers allow customers to tap into the U-verse service even in rooms without traditional TV outlets. AT&T, which introduced the receivers about a year ago, recently began cranking up its sales efforts by offering free wireless receivers to customers who sign up for certain U-verse bundles. As a result, Dillard said the company has now placed more than a million wireless receivers in customer homes and cut down on installation costs.
