Why Is Verizon Sweating Netflix?

Dave Zatz —  October 1, 2011


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Apparently Verizon didn’t get the memo: If it’s Netflix versus cable, the MSOs have won. Verizon seems to think Netflix is some sort of competitor given recent FiOS TV customer outreach. As you can see in the photo at the bottom, for months, Verizon has run video on demand television commercials that prominently display their new release titles are available 4 weeks before Netflix DVD rentals. And today, I received the email below with a subject line that reads, “Want to know how FiOS beats Netflix?” Verizon does score a few points for calling out Netflix’s upcoming boneheaded division of services:

Netflix now makes you go to two places and pay two prices to watch movies on both streaming and DVDs.

Irrespective of Netflix’s upcoming split, for most of us, they’re just not direct competition to a cable company’s video on demand offering. There’s a sizable and growing contingent of cord cutters who utilize Netflix, amongst other services and other-the-air broadcast, to round out their entertainment options. But for those of us who subscribe to both cable and Netflix, the streaming service primarily and economically augments pay TV with a wide array of supplemental content — including back catalog movies or more obscure content and entire television seasons.


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So while Verizon may offer a lofty 30,000 title library on demand, most folks aren’t looking for it there and their pricing can’t touch Netflix’s $7.99/month. But us dual subscribers are in need of blockbuster new release titles. And Verizon’s competition amongst the highly connected crowd seeking instant gratification is more Apple TV or Amazon Video On Demand. They’re who I turn to first. I haven’t yet been upgraded to IMG 1.9, and can’t comment on that experience. But, from Verizon’s older FiOS TV UI, there’s just way too much clicking around to access the content I want. Further, it seems Verizon new releases cost a buck more than their digital competitors. It’s just quicker, nicer, and cheaper to rent individual movies via AppleTV. (Of course, with hardware running $100 it’d take a lot of movies for the price to matter independently.)

9 responses to Why Is Verizon Sweating Netflix?

  1. It’s one front on a larger war Verizon is waging against OTT…

  2. They should be marketing vs. Redbox and Blockbuster kiosks.

  3. I’ve noted this too Dave — Verizon definitely seems to have Netflix in their sites.

    As a fellow FIOS subscriber, I’m with you on the difficulty of using the interface on the TV (they’ve just rolled out a new interface that I’ve yet to play with, so I reserve the option to take that back)

    And the FlexView-doesn’t-play-on-Mac thing is puzzling — given the profile of Mac users, you’d think they’d be working on that – there aren’t the iOS issues.

    Which brings me to the iPad app: the fact that there’s no actual TVE play on it, just VOD, makes me wonder what’s going on – they’ve promised that app for over a year and then when they come out with it, it has all kinds of serious flaws – I was hoping it would be an iTunes replacement for downloads that I could watch on the iPad and on TV – but it’s such a frustrating experience that I’m not touching it until they release an update.

    They’re also looking at an XBox app – more places to watch their VOD content where you might otherwise go to Netflix.

    None of the major players seem to be thinking about the vast difference between streaming and downloading, which is not about how long before you can start watching, but about where you’re going to watch it: you can’t watch streaming video on a plane, a train or most hotel rooms.

    FIOS definitely sees Netflix as their competitor though: remember – there’s a huge segment of their user base who rent DVDs from Netflix and know you can “stream” it, but don’t know how that works. If Verizon can make it easy for them to get their movies and TV shows on multiple devices and (very key) it might be a smart move. Especially if they’re able to get non-subscribers to take part in their VOD service, something they’ve already enabled on their iPad app.

  4. I’ve noted this too Dave — Verizon definitely seems to have Netflix in their sights.

    As a fellow FIOS subscriber, I’m with you on the difficulty of using the TV interface (they’ve just rolled out a new interface that I’ve yet to play with, so I reserve the option to take that back)

    And the FlexView-won’t-play-on-Mac thing is puzzling — given the profile of Mac users, you’d think they’d be working on that – or at least be more upfront about the issue (tried to rent a movie online once, got to the part where you pay, and it just showed an error message – had to go to the Verizon FAQ site to learn it doesn’t work on Mac.

    Which brings me to the new underpublicized iPad app: the fact that there’s no actual TVE play on it, just VOD, makes me wonder what’s going on – they’ve promised that app for over a year and then when they come out with it, it has all kinds of serious flaws and is just a download service.

    When I first saw it, I was hoping it could be an iTunes replacement that would not need a second device to allow me to continue watching on TV – but it’s such a frustrating experience that I’m not touching the app until they release an update.

    FIOS is also looking at an XBox app – more places to watch their VOD content where you might otherwise go to Netflix.

    None of the major players seem to be thinking about the vast difference between streaming and downloading, which is all about where you’re going to watch it: you can’t watch streaming video on a plane, a train or most hotel rooms.

    FIOS definitely sees Netflix as their competitor though: remember – there’s a huge segment of their user base who rent DVDs from Netflix and know you can “stream” it, but don’t know how that works and have no interest in a Roku box or Apple TV.

    If Verizon can make it easy for those people to rent or buy movies and TV shows on their TVs and, if they want, other devices, it might be a smart move. Especially if they’re able to get non-subscribers to take part in their VOD service, something they’ve already enabled on their iPad app.

  5. Alan, way back in January, Verizon had FiOS services running on over three dozen non-STBs… including Blu-ray players and they did mention one unnamed gaming console (which I presumed to be PS3).

    http://www.zatznotfunny.com/2011-01/what-if-verizon-fios-tv-was-an-app/

    http://www.zatznotfunny.com/2011-01/the-best-of-ces-fios-tv-motorola-atrix/

    Additionally, at that time I believe Microsoft and/or AT&T had been contemplating taking something like the IPTV-based U-Verse national. Which is already available on Xbox.

    http://www.att.com/u-verse/explore/xbox-receiver.jsp

  6. Thanks for the links Dave

    So what are your thoughts on why it took Verizon so long to come out with an iPad app? And when they finally did, why wasn’t it TV Everywhere? It’s one of the worst designed apps I’ve ever encountered (from a UI perspective) and just seems like something that was rushed out, not something that was the result of a 9 month project.

    The main argument in favor of them taking on Netflix is the same one the cable companies used to take on TiVo: We can make this whole streaming-and-downloading videos across devices a whole lot easier and less scary and you won’t have to buy or install new equipment or anything.

    It’s easy to forget how much convenience factors into most people’s decision-making process when it comes to tech.

  7. Alan, I assume they’re working on an iPad app similar to TWC and Cablevision offerings with many channels of live TV. But they must be hung up working through the licensing. So I wonder if this dedicated FlexView app is a stop-gap. They have way too many apps – all these functionalities should be merged into a single Verizon FiOS TV app. Unless FlexView is one day expected to take on Amazon VOD or Vudu.

  8. Dave,

    Don’t forget (not that you would) all those MILLIONs (well hundreds of thousands anyway) of customers using Tivos and Windows Media Centers with Cable Cards (and thousands using Cable Card equipped TVs) who simply can’t get to the On Demand Content from Verizon, Comcast or Time Warner because they have it locked down.

    If I could buy a movie from Comcast I might do that instead of waiting four weeks for it to become available on my Apple TV. But I can’t. They won’t let me.

  9. Is FiOS vOD any better than it used to be? The last time I checked it out it was still not very good. 15Mbps MPEG2 encodes that had macroblocking everytime there were bright flashes, fast pans, or quick movement. Have they improved the encoding any and increased the bandwidth? Or gone to MPEG4 instead?