Reported first by Reuters today, Verizon Communications is preparing a streaming service that will offer movies and television shows to customers that don’t have access or currently subscribe to Verizon FiOS. While no pricing has been released for the proposed streaming package, the source told Reuters that the service would potentially launch during 2012. The programming would be limited to a couple packages of movies similar to the Starz package that’s currently available on Netflix until the contract expires in early 2012. One early candidate was the Epix library of content. All discussions between Verizon and potential programming partners are confidential at this time and the company isn’t expected to announce partners until the service officially launches.
While Verizon has a subscriber base of 4 million FiOS TV customers and 4.6 million broadband customers, providing this type of streaming service will open up Verizon’s reach to approximately 85 million U.S. households. One of Verizon’s company goals is to acquire a larger FiOS subscriber base, thus lowering the cost of content per customer. With more customers, it’s easier to negotiate lower licensing fees for new content. With the launch of the Verizon FiOS application for Xbox 360 consoles, Verizon has already taken steps toward providing streaming programming. While the Xbox 360 app is currently limited to subscribers of Verizon FiOS service, the company could open up the app to all consoles by charging an additional fee for streaming content.
According to Netflix CEO Reed Hastings, he believes that Netflix’s most fearsome competitor is the Time Warner-owned HBO Go. Hastings is concerned that HBO may go down the path of licensing other content on the HBO Go service. Both companies spend between $1 to $2 billion dollars a year on content, a large amount of money that would have to be provided for content by a new competitor like Verizon.
