There is a kind of visible desperation about video for Verizon – it HAS to make at least ONE thing work in video, but it appears not to know precisely what that thing is going to be. To that extent it can be seen as a technology business without a vision – a solution looking to solve the right problem.
This week it opened yet another video door, one that is supposed to convert your Verizon service contract to be the location of all your TV viewing, in a complete Mobile First TV approach – this time adding to its Go90 service by buying into AwesomenessTV, previously owned by DreamWorks Animation and Hearst.
Verizon will buy 24.5% of the equity stake of AwesomenessTV, leaving DreamWorks Animation with 51%, and Hearst with the remaining 24.5%. The deal is said to value AwesomenessTV at $650 million, which would imply that Verizon paid some $159 million for that 24.5% stake.
DreamWorks bought AwesomenessTV in 2013 and there will likely be no real change in who runs the business. But Verizon will immediately cut a deal with AwesomenessTV to create a premium short-form mobile video service, featuring leading talent in front of and behind the camera.
The fact that Verizon is obsessed with short forms of video shows that it simply does not understand video and the smartphone – in the modern world, the subscription may belong to a smartphone, but that doesn’t mean that it is going to play on a smartphone. It might just as easily be logged into from a tablet, a laptop or a smart TV, and from a phone it might be shifted to any of the above with a simple swipe gesture.
This new set of short form content will have a new brand, and Verizon says it will feature transactional content – meaning you will have to select from a multiple set of bundles or even purchase pay per view. It hopes to have some for a variety of different audiences.
These comments alone tell us the scope of the Verizon video plans It expects to have a version of Go90 for everyone, and have different payment and premium options within each version. So although it has bought into AwesomenessTV, Verizon will also pay for the production costs of this new content and hold it exclusively, in the US at least. The precise size of the payments it will make for episodes, or how many there will be or precisely how long each will be, remains unsaid at this point.
Verizon mentions Generation Z and Millennials, those two elusive, and poorly defined generations, which are so sought after by video services and so missing from the general video demographic. Verizon also cites AwesomenessTV’s ability to zero in on content for these generations. However, AwesomenessTV says that the deal with double revenues during the first 12 months.
The original purchase of AwesomenessTV was for $33 million up front by DreamWorks Animation, but after stage payments, it ended up paying $128.5 million for the company. When Hearst bought into the business the value leaped to $325 million, selling a 25% stake for $81 million and now it has doubled yet again, so it makes sense to think that the revenues have also doubled this past two years and will double again with the Verizon deal.
But given that initial estimates for revenue were around $20 million, then even if it has doubled twice, it is now around $80 million, and heading for $160 million next year with this deal.
It still looks like Verizon is simply firing off deals left right and center in a scattergun approach, hoping to hit the millennials and gen Z target more by luck than judgement.