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FIOS TV exec: Cord cutting is growing, and changing the TV biz

Cord cutting is real, and it continues to grow: You might have heard that opinion before — but not necessarily from someone in the business of selling pay TV subscriptions. However, Verizon’s (s VZ) director of consumer video services Maitreyi Krishnaswamy, who is responsible for the company’s FIOS TV service, said as much in an interview with The Tampa Tribune Thursday (hat tip to Karl Bode).

Asked whether cord cutting is losing steam, Krishnaswamy said:

“No, that trend is not stopping. It’s growing. The question is: Is it growing enough for us?”

Of course, many traditional TV services vendors would rather see cord cutting just go away, but Verizon seems to have a slightly different take on the matter. That’s not just because the company is rolling out a Netflix competitor in cooperation with Redbox (s CSTAR) later this year, but also because cord cutting is fundamentally changing the parameters of Verizon’s TV business. Again, Krishnaswamy:

“Is the migration to a-la-carte enough that we can go that route? It has a way more important impact that (sic) just on them. It impacts how we negotiate TV contracts with studios. It’s not something we can do overnight, but definitely something we’ve been looking at.”

Krishnaswamy didn’t spell out all the details, but here is what I read between the lines of this statement: Cord cutting isn’t just about some people not paying for TV anymore, but also about enabling new and innovative business models, including unbundled subscriptions to individual channels. And Verizon is apparently ready to take the plunge as soon as the wave is big enough.

15 Responses to “FIOS TV exec: Cord cutting is growing, and changing the TV biz”

  1. If I have to pay for a channel on cable it should be commerical free. If I watch OTA TV then I should expect some commericals to pay for the programming. New TV’s should have cable boxes built in and code and password to activate the un-encript. I pay as much for cable boxes as I do mid rage package of cable channels. It has gotten way to expensive… like another car payment range.

    If I can get an inexpensive OTA HDD HD DVR/ A good Streaming Box I’m gone. I watch mostly Network TV off my DVR anyway. Occassional movies I’ll pay as I go through Vudu or Blockbuster or other similar service.

    Watching the product of Simple.TV and Boxee.TV although with Simple.TV I would have to buy three streaming Roku boxes and a 2 TB HDD and only one TV Turner in this box plus the price is high for this really simple product. The Boxee.TV why do I want to trade renting 3 Fios DVR boxes $17 for three Boxee.TV boxes to pay for 3 $15 could DVR accounts doesn’t seem like a good move ether.

  2. Verizon needs to offer reasonable FIOS internet only packages. When a 10/1 MBPS Time Warner plan costs $29.99 per month and a 15/5 FIOS package is $64.99 / Month something is terribly wrong with the FIOS pricing. Verizon is better, but its not worth double the price or even close to it.

  3. With High Unemployment and lower wages, people are figuring out with Apple TV, Smart Tv’s and Roku and FREE Digital TV you can live with out Comcast’s High Priced Headaches!

  4. streamingguy

    If public outrage reaches such a level that providers move away from packaging to a la carte then FiOS won’t be facing 5 competitors but thousands. Net neutrality will enable every programmer and entertainment portal to offer these services directly to consumers over Verizon’s FiOS infrastructure. I won’t be holding my breath for Verizon and the incumbents to embrace that scenario that’s for sure. My blog

  5. I agree that vicious cycle of increasing rates is a problem and that frankly, the content isn’t worth the price that’s demanded of it currently (at least in the current “packaged content” system) but I think that there is a big and important factor to all of this that everyone seems to miss, repeatedly. Content production is a business, and like all businesses, it is going to have to be sustained with revenues and cash-flow. People complain about advertising, but advertising is the reason that they don’t have to pay more out-of-pocket than they already do for access to the content that they like. The Netflix and other competitive streaming model is only successful currently because it is competitive but if everyone “cuts the cord” and attempts to follow suit in a streaming-only capacity, that $7.99/month that you pay to Netflix is going to skyrocket. Why? Because content producers will no longer receive the revenues from advertising and MSO contracts that they currently enjoy; that means that they will need to shift the full brunt of their costs and rates to the remaining streaming players, who will in turn shift them to you.

    Advertising may not be a perfect model but it’s frankly the best model we have going. A la carte selection and payment may be great for consumers but it just can’t sustain the content production business.

    • Nissan B Thomas

      @Gritz – What does a la carte programming have to do with producing content? A la carte programming only changes the dynamics of how studios receive money from MSOs. So take Viacom, which owns cable and by way of owning cbs, owns free over the air broadcasts. Unbundling would mean Viacom would offer all of their channels, for a certain price. Viacom and its subsidiary channels would create an app for each MSO, that a potential subscriber would choose on a monthly, weekly, or daily basis, which channels to watch. So maybe there is a fee to download the app, then a monthly fee, no matter if the subscriber decides to not use the app, once it is downloaded, the subscriber will have to pay for 30days of viewing. Actually, I think the studios and MSOs would make more money, thereby supporting producing quality content.

      • A la carte

        My view of A la carte is different. In my view, “channels” cease to exist, “prime time” ceases to exist. I simply choose what to watch from a big menu and watch any time I am free. It could be morning, it could be 2am but I’m not stuck watching or even recording during some corporate concept of a prime time. I don’t necessarily need access to anything for an entire day or week or month. And I don’t need bundles of anything, just individual programs.

        Content can still be produced as a traditional network series, it just shows up on the big menu whenever they feel it should. No concept of “tune in next week”. That gets replaced by “download the next episode when we release it”.

        The concept of “we will stream a bunch of shows by your tv on our schedule and you try to catch it as it goes by” is outdated. I don’t need a bunch of shows that someone else picks. I want individual shows chosen by me.

    • “that $7.99/month that you pay to Netflix is going to skyrocket.”

      Not necessarily – perhaps if the networks are forced into dropping non-profitable garbage shows – like Bayou Billionaires, Swamp Loggers, Pawn (everything), Storage (everything), Sit, World’s Strictest Parents (and anything with “BooBoo” in it) those production costs can be redirected into higher quality shows. Also, actors will be forced into reducing their ridiculous demands for more and more money per episode. Maybe even the big shots will be forced into giving up their million dollar salaries and bonuses. (Unlikely, but, hey – it could happen!)

      I don’t mind reasonable advertising, but ads taking up 30% of the show time, ads across the bottom of the screen taking up over 1/4 the screen during the show, constant ads in the lower right corner of the screen, and having even more minutes taken up by having to repeat the last few minutes before they showed 5 or 6 minutes of commercials (because we can’t remember what happened before the break), are just too much. (And all this from cable companies who started their sales pitches originally with the promise of “no commercials” at all!!) The first time I watched shows on Netflix without ads, it was a revelation – “why is this show only 41 minutes? It’s supposed to be an hour! Crap, you mean I’ve been paying to be advertised to for 19 minutes every hour?????!!!!! The pay-TV moguls will soon realize that if they can’t present what the viewer wants at a reasonable price, the viewer will go elsewhere.

      Wise up. Television itself is becoming less and less a fixture in many homes. (There are 500,000 less tv’s than there were a few years ago. This is another trend that’s not going away.) It’s NOT just the economy – there’s no value in it anymore. People are seeing the TV as just a medium to deliver ads – nothing more. Entertainment can be had in so many different places and ways that we haven’t even begun to see what can happen given a bit more time.

      The best way to deal right now? Just sit back and watch how it all plays out….

  6. I’m a proud cord cutter. Content creators keep demanding more money from providers such as Verizon and Comcast. In turn providers will keep raising the rates they charge consumers. At some point consumers will refuse to pay what providers charge. Consumers will seek other sources of video entertainment as well as other forms of entertainment in general. People will refuse to allow content creators and providers to hold them hostage.

  7. There are now more commercials than content. 3 min content, 2 min teaser for future content, 3 min commercials, 3 min content, etc. The later part brain mashing and repetitive.

    Without a DVR, TV became practically useless. And with it, big pain. Not worth the little time I have.

    We finally decided to cut the cord. We do Netflix, IPTV streaming, and ocassionally buy DVDs. We still get broadband and phone service, though. But TV is gone. @TechStefan