Verizon CEO Ivan Seidenberg sees the writing on the wall: "Young people are pretty smart. They're not going to pay for something they don't need to," he said at the Goldman Sachs Communacopia conference today, sending a strong message that Verizon believes that the cord-cutting trend being reported is more fact than fantasy. "Over the top is going to be a pretty big issue for cable."
Perhaps, because he's a telco guy and not a cable guy, he's had a better look at how changing technology can radically change your business, as in the way Verizon, AT&T and other telcos have seen their businesses lose customers as consumers dropped landline telephones to go wireless.
He's definitely in the minority.
Comcast CFO Michael Angelakis yesterday took the exact opposite stance, saying, "When people say there's cord cutting, we really just don't see it. And when we think about cord cutting or the flavor of the day, we look at that as primarily competition to our VOD business, not to our core business."
Of course, Angelakis also yesterday said Comcast was relaunching its own over-the-top play, Xfinity. "The goal really is to provide our customers with the content that they want, where they want it and, frankly, provide them with as much as they want so they don't feel they need an alternative."
Seidenberg said Verizon, which is heavily invested in its own cable play, of a different ilk, in the form of its 3.5 million-subscriber FiOS TV offering, won't be hurt as badly as cable will because the business is a relatively small portion of Verizon's overall portfolio. Verizon, he said, will be able to offer a strong broadband component on which OTT offerings can be carried.
"We take the over the top issue with video very seriously," he said. "I think cable has some life left in its model... but that it is going to get disintermediated over the next several years.
"I've seen the movie. If you remain static too long, the technology is going to nibble at you on the edges, and you have to be prepared for it."
Last week, Credit Suisse downgraded its outlook for a number of media companies, primarily because it saw pay-TV share eroding as more younger consumers turned to over-the-top delivery options like Netflix. In fact, it found that 37 percent of Netflix users between the ages of 25 and 34 use Netflix streaming services instead of pay TV, and another 30 percent of subscribers between 18 and 24 also have cut the cord.
- see this Wall Street Journal article
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