On October 1st, Verizon launched their ambitious mobile video streaming service, Go90 http://bit.ly/1Np4qGb. The free mobile app, which is available in Google Play and the App Store, will eventually feature a wide range of original and licensed content, including live sports. Go90 ‘s focus on short form original content and live sports will put Verizon, with their purchase of AOL, in a new position as media publisher and ad platform focused on Millennials.
Well, join the crowd, right? Say hello to Netflix, Hulu, YouTube and Snapchat who all have similar ambition in various forms.
But Go90 has a really good chance to separate themselves from America’s video streaming services. Verizon’s ace in the hole in this game is sponsored data. In June during a conference call with the media, Verizon Communications CFO Fran Shammo said sponsored data will be part of Go90 “down the road”.
Sponsored data is the emerging mobile data business model in which parts or all of a consumer’s mobile data usage fees are paid for by someone else, such as advertisers. Verizon Wireless could give their subscribers Go90 for free. Let me repeat that – Verizon Wireless subscribers could watch Go90 video and incur no mobile data usage fee to do it (known as zero-rating).
Zero-rated data will become an increasingly big deal. Cisco in their last VNI report estimated U.S. smartphone users, who consumed on average 1.8 GB of mobile data per month in 2014 will consume a whopping 7.8 GB of mobile data per month in 2018 (Note: Cisco’s estimates include offload to Wi-Fi, so big chunks of this data use will not be on cellular networks).
Free mobile video will get consumer’s attention, and quite a few will be happy to watch ads in exchange for eliminating the mobile data usage fee associated with the video. In addition to pleasing current Verizon Wireless subscribers, sponsored-data fueled Go90 could become a switching strategy, a very compelling reason Millennials and others will switch carriers to become Verizon Wireless subscribers. So while consumers will be able to download the Go90 app and use it on any mobile network, the free data offers will only be available to Verizon Wireless subscribers.
Go90’s success will hinge on how Verizon executes sponsored data. The cleanest and best deal for subscribers is all you can eat mobile video with no mobile data charge. That isn’t likely to happen for awhile simply because of licensing fees associated with content Verizon doesn’t produce. More likely is selected sponsored data, where some but not all content is zero-rated. The worst execution of sponsored data for Go90 would be to make sponsored content conditional, the way AT&T is going with Daily Perks . In this model the consumer has to “earn” the zero-rated data by taking a survey, signing up for a program or to make a purchase from a sponsor. That model is completely doomed.
Hopefully, Verizon will keep it clean and frictionless for consumers and stick to ad-supported content. If they do, Verizon has a significant opportunity to become a dominant media publisher. If they execute sponsored data for Go90 well, then they can push the sponsored data model out to other third party platforms, like Facebook/Instagram, Twitter, Snapchat, Amazon, Google etc., for Verizon Wireless subscribers.
For more on the outlook for sponsored data, see my market research report, here .