Verizon’s FiOS video net additions in 2Q17
A major driver of Verizon’s (VZ) wireline component is its FiOS service. Verizon’s FiOS is a fiber-optic network service that provides subscribers with voice, Internet, and video services. Verizon is well positioned with FiOS but lacks scale in video and broadband service. In 2Q17, Verizon lost 15,000 FiOS video customers as compared to 41,000 net losses in 2Q16.
In 2Q17, Verizon’s FiOS video penetration declined by 120 basis points to reach 33.4% as compared to 34.6% in 2Q16. This decline was primarily due to softer linear TV demand. The trend of softer linear TV demand is coming from the rapid growth in OTT (over-the-top) video viewing trends and competitive promotional offers.
The online video streaming space in the US is a crowded component. In addition to Netflix (NFLX), pay-TV service providers such as Dish Network’s (DISH) Sling TV and media firm Time Warner’s (TWX) HBO are competing for potential customers in this space.
According to reports, pay-TV service providers such as Verizon, Comcast (CMCSA) as well as Charter Communications (CHTR) are currently losing customers to online video streaming players. This is a phenomenon known as “cord-cutting.”