Verizon’s FiOS video net additions in 2Q17
An important driver of Verizon’s (VZ) wireline component is its FiOS service. Verizon’s FiOS is a fiber-optic network service that offers subscribers Internet, voice, and video services. Wall Street anticipates a net loss of FiOS video subscribers in 2Q17, as the carrier continued to face aggressive competition from cable and OTT (over-the-top) video streaming companies in Verizon’s footprint.
Verizon is well positioned with FiOS, but it lacks scale in broadband and video services. Earlier in 1Q17, Verizon lost 13,000 FiOS video subscribers, compared to 43,000 net additions in 1Q16. Also, Verizon’s FiOS video penetration fell by 120 basis points to reach 33.8% in 1Q17, compared to 35.0% in 1Q16. This decline was mainly because of softer linear TV demand. The trend of softer linear TV demand comes from fast growth in the OTT video streaming market and competitive promotional offers.
The online video streaming market in the United States is a crowded component. In addition to Netflix (NFLX), pay-TV providers like Dish Network’s (DISH) Sling TV and media firm Time Warner’s (TWX) HBO are competing for potential subscribers in this segment.
According to reports, pay-TV providers like Comcast (CMCSA), Verizon, and Charter (CHTR) are currently losing subscribers to online video streaming companies. This phenomenon is known as “cord-cutting.”