Bowing out of media after years of trying to build a digital advertising colossus to challenge the ad duopoly is the most Verizon thing to have happened to Verizon in years.
In a $5 billion transaction to private equity giant Apollo Global Management, the US operator is selling all its Verizon Media brands – including assets associated with Yahoo and AOL, as well as the advanced advertising business created jointly by Yahoo and AOL.
Bizarrely, the new business – in which Verizon will own 10% – will be called Yahoo. On one hand, Yahoo is a brand that has been stripped of all identity through years of changes, so the decision to not spin up something new and fresh seems peculiar. But on the other hand, keeping a widely recognized brand name could be Apollo’s way of delicately handling these assets after years of brand abuse.
As a quick reminder, Verizon has made some questionable bets over the years, splurging some $10 billion on a bunch of internet assets way past their prime, including AOL in 2015 and Yahoo in 2017. These assets then enjoyed a brief spell under the brand name Oath, which began being phased out in late 2018 after Verizon announced it would write down these assets by $4.6 billion (around half the value at the time), before Verizon Media was eventually created to provide a bit of clarity and direction for a business that was looking increasingly lost.
Verizon has made a number of changes to its ad tech businesses since the capitulation of its Oath division that prompted a comprehensive five-year review – taking three years to decide that wrapping everything media up into a 90% sale was the best course of action.
The latest for the renamed Verizon Media arm came in April 2020 with the launch of Smart Prebid, a server-side ad integration that optimizes the order of bidding in publishers’ favor, as well as 4K HDR broadcasts and the promise of sub-second latency in live streaming.
Today, Verizon Media and its affiliates reach nearly 900 million monthly active users worldwide, through customers and brands including HuffPost, Engadget, TechCrunch, as well as the News, Mail, Entertainment, and Sports brands associated with Yahoo, and not forgetting AOL.com.
Looking forward, Verizon’s press release is so fully focused on the potential for growth in the advertising business, talking about growing Verizon Media’s full stack ad platform to capitalize on post-pandemic revenue opportunities, that it leaves no room for comment on Verizon Media’s other technological responsibilities, which includes a CDN platform, security, and UX development.
Meanwhile, the research side of Verizon Media is where the really interesting stuff is happening, applying ML and AI research to areas like object recognition, augmented reality, visual aesthetics, natural language understanding, personalization, and content understanding. There are a wealth of data science activities going on at Verizon Media and Yahoo, hitting on some important potential growth areas that could complement the core advertising business.
One of Verizon Media’s more recent developments is a sociable VR experience, which is being created in partnership with sports gambling outfit Entain, to enable live sports betting in an immersive environment.
On the content delivery side of the business, Verizon Media has developed a platform based on Quick UDP Internet Connections (QUIC) to enable maximum web performance speed and security. Its CDN portfolio boasts intelligent load balancing and strategically placed caching servers at carrier interconnections points to provide delivery services to remote geographies by peering with those same carriers.
We also know that Verizon Media uses OTT and Backstage technologies from 24i Media, now part of Amino. Verizon Media customers are able to access 24i’s video application development platform for deploying live and on-demand UIs, while Backstage is a CMS that enables app creation for targeting additional devices without writing any extra code.
At the virtual IBC 2020 last September, we recall a standout line from a Verizon Media executive who claimed the primary focus of its telco parent is OTT video, something that has stuck in our minds for the sheer audacity of such a claim that was – and remains – very far from the truth. This fallacy was followed by a list of hot investment areas for Verizon Media to impress the panel and audience, including a multi-CDN strategy, built-in distributed load balancing, sub-second real-time streaming, and edge compute services.
This preceded a sweeping update across Verizon Media’s services in April 2020, including live streaming capabilities. The platform’s ingest, encoding and CDN capabilities were all upgraded to support delivery of live content in 4K HDR, while boosting broadcasts to scale out to over 10 million devices, according to tests at the time.
A new dashboard for live event operators was also updated with Live Event Markers. This enables operators to tag moments of interest throughout a live event, such as a goal being scored or a break in play. This metadata is then published alongside the video streams, allowing content owners to design new features for on screen overlays and interactivity. Verizon Media also had a Real-time Streaming feature running in beta mode this time last year, working towards sub-second latency in live event streaming.
Verizon Media also upgraded the analytical tools available for both advertisers and publishers, enabling teams to better highlight errors, timeouts and tracking issues. We should also drop in an honorable mention for German IP broadcast vendor Lawo, which supplies Verizon Media with IP infrastructure.
Apollo Global Management was for a long time the frontrunner to acquire DirecTV. Initially, we had assumed that TPG had simply came out with a better offer for the satellite TV business, although now we are thinking that Apollo’s head was turned to a very different flavor of US operator assets with greater potential for recovery as the advertising market rises from the ashes stronger than before.