Verizon’s expectations for go90
During the recent J.P. Morgan Global Technology, Media and Telecom Conference, Lowell McAdam, Verizon’s (VZ) chair and CEO, talked about the performance of Verizon go90, the mobile first OTT (or over-the-top service) in comparison to the company’s expectations. McAdam said, “I think we had always internally viewed go90 as what we call patient money inside the business that we knew, because it wasn’t our core competency, we knew we were going to have to build slowly in this area.”
He added, “And the way I would characterize it, we have seen enough success to make us excited about continuing to work it. But we didn’t believe, and I think it did get a little bit overhyped and I’m sure we contributed to that to a certain extent, but we didn’t believe that it was going to move the needle on $130 billion revenue stream overnight.”
How Verizon’s acquisitions contributed to go90
According to Verizon, upLynk, a multi-device video encoding service, and EdgeCast, a CDN (or content delivery network), enhanced its capabilities to distribute video content efficiently. Verizon bought these companies earlier in 2013.
Additionally, as per the company, it got OnCue, an Internet TV service, of Intel (INTC) during 2014. Moreover, Verizon used OnCue’s technology in the user interface of the go90 service. In addition, go90 also got AOL’s content as well as advertising capabilities. Verizon acquired AOL in 2Q15.
For diversified exposure to telecom companies in the US, you can consider investing in the SPDR S&P 500 ETF (SPY). The ETF held a total of ~2.7% in AT&T (T), Verizon, CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of April 2016.