Verizon’s FiOS TV operation has taken its first forays into mobile access, starting with the on-demand Flex View service nearly three years ago, and now extending to linear content delivery with FiOS Mobile. In this interview with ScreenPlays editor Fred Dawson, Maitreyi Krishnaswamy, director of consumer video services at Verizon, explains the capabilities built into these new services and discusses prospects for going farther, including the role advertising might play in extending FiOS TV reach over LTE.
ScreenPlays – You’ve been moving ahead pretty aggressively with variations on the TV Everywhere theme and doing it around whatever the market will allow as far as the rights are concerned. Can you update us on where things stand both with your Flex View agenda and with the new FiOS Mobile?
Maitreyi Krishnaswamy – As you know, Fred, Verizon was a big innovator in multiscreen video on demand. In 2010 we introduced a new service where a customer could buy a movie or a television show once on their set-top box, and for that same price they would have the flexibility to watch it on up to four additional devices. For example, recently with Skyfall, I started watching it on my set-top; I had to take off on my flight to Las Vegas, and I was able to continue the movie.
We even offer both a download as well as a streaming option for customers, keeping in mind that sometimes I might be in a Wi-Fi connection or a 4G connection, but at times I might be on a flight where I have no access. So that’s been a very big successful launch for us, and our on-demand penetration has been really high due to that service.
SP – When you say your on-demand penetration has been high due to that service, are you talking about your overall on-demand usage and that this has become a percentage of that?
Krishnaswamy – It has significantly added to the total. Actually SNL Kagan rated Verizon FiOS as number one both in on-demand penetration titles as well as average revenue per subscriber. We are twice the average revenue per subscriber compared to our cable competition. So that’s been a big success story for us.
But the feedback from customers has really been around, “We want a complete borderless entertainment life. We want access to all our favorite linear channels as well on our mobile devices.”
We listened to the customer and expanded our CDN (content delivery network) so that we could really deliver high-viewership channels, high-affinity content to customers on their favorite devices like the iPad. Last November we launched FiOS Mobile, which now delivers 75 linear channels to our customers. They can watch everything from MTV to MSNBC to Sponge Bob, Sports Center – a great variety on their tablet.
What’s been really great is that the whole user experience is extremely visual, elegant, simple. Our customers describe it as being delightful. It’s a visual thumbnail so you can literally browse all your content as video thumbnails. So even a five-year-old child who may not know how to read knows how to fix Sponge Bob and watch it. And, of course, the video quality has been phenomenal on it. As you know we evolved our depth of profiling to a very high quality.
SP – How do you deal with the navigation challenges in the small-screen space?\
Krishnaswamy – Another key aspect of what we’ve done is around search and discovery. Finding related content on this app is super easy. If you’re watching the Obama health care update on CNN and, all of a sudden, you said I want to catch what NBC has to say about it, you can just double tap on your iPad and see all the related channels with video thumbnails right across the screen.
So it’s been easy for customers to find content. And I think that’s sort of a relief for customers from the huge TV set and the set-top. Sometimes customers tell me you have 500 channels, but I just can’t find what I want to watch, but on the tablet I can really find it much easier.
One thing we’ve been very happy about is the engagement time per session has been growing very fast. Right now customers spend about 47 minutes per session on the tablet. And the number of customers tends to grow day after day. So overall, it’s been a really good story for us.
SP – Of course, it’s just the beginning. You’re talking about the iPad. There are other tablets out there, and then there are all these other devices, including the Xbox. And I want to ask you about that in a moment. But just to get clear on the service profiles and how people get these services, with respect to the Flex View service, is that available to all subscribers or do they have to sign up for that?
Krishnaswamy – As long as you’re a FiOS subscriber you have access to your Flex View on demand and FiOS Mobile. So we authenticate the customer, make sure you’re a FiOS customer and then deliver those services to you.
SP – They’re not paying extra for the privilege of paying you for on-demand content?
Krishnaswamy – Absolutely not. And that’s why I think the service succeeds and strikes a good chord with our customer, because for the same price of one on-demand title, for renting an on-demand title, which could be between $4.99 to $6.99, I can watch it on five different screens. And that’s what our customers have loved about the service.
The FiOS Mobile is available to all customers to access while they’re in the home. So we position it as a tablet TV in the home. If I want to relax on my backyard and watch my favorite Food Network show, I can just take my tablet to the back yard. It gives a lot of flexibility to the customer with no additional fees.
SP – While you’re calling this FiOS Mobile, as a liner service it’s bounded by the home and the reach inside the home. As you look at the evolution of this service and this capability, do you expect that things will open up to where that FiOS Mobile service will be available to your FiOS TV subscribers wherever they are?
Krishnaswamy – Yes. As you look at customer demand for content everywhere, customers come out and say, “I want to watch what I want when I want wherever I want.” This has really caused a lot of interesting discussions among content providers, operators and content creators. It’s opening up a lot of questions around rights.
The technology today from a FiOS perspective is already there. We have a cloud delivery infrastructure. Everything can be delivered over IP. But really the conversation now is with the big 40 networks. How do we get the rights? How do we measure for usage outside the home? And how do we make sure there’s a good monetization and advertising model around it?
I’m certainly looking forward to it. The next few months are going to be very interesting. There’s going to be a lot of evolution in this space. We’re definitely committed to keeping up that promise for the customer and, at the same time, delivering out-of-home content but with the right rights and monetization models embedded within it.
SP – You’re saying something very interesting insofar as up to now a lot of the discussion publicly has been simply about the rights issues. But mentioning advertising and monetization really goes to the heart of the matter, because I assume the content owners are looking at this situation that’s emerging with dynamic advertising,
Madison Avenue is pretty excited about it, and certainly the technologies are out there now to support it. So then the question is, okay, how does this pie get divided up? They have the rights carrot to hold and say we want to give you the rights, but we want a share in this advertising game. And you’re saying, well, we have to support this with our technology and our networks and everything else, so it can’t just be that you get to sell all your ads and that’s the end of the story. So how are those negotiations going?
Krishnaswamy – I think they’re going pretty well, because there are some well-established models around monetization. If you look at the normal TV delivery infrastructure you see today on set-tops, I think what the industry is really trying to do is to think about measurement.
What drives national advertisers and the value of those ads is the ability to measure the usage of the most popular programs. As you know, the common currency of measurement is Nielsen on normal TV. What we’re seeing now is Nielsen is taking a more pro-active approach toward making sure the same measurements we have on set-tops and TV sets are now available on tablets and other consumer electronics devices. There have been some interesting announcements around it.
We’re eagerly awaiting solutions, and we’re working together to resolve the problem. I think everyone is taking a proactive approach. So I would definitely look at early next year as bringing some good changes for everyone.
SP – When we get into the IP domain and tablets and what have you, we’re talking about going way past the old Nielsen approaches. Now we’re getting real numbers on every possible user, which puts quite a collection burden on the operators. It’s not just Nielsen anymore collecting the data.
So you’ve got to buy into different vendors’ approaches to doing this kind of stuff. Do you feel that once there’s agreement on what the data points are and how to aggregate them and report things the technology will be there to really pull this together and that you can deliver on these capabilities?
Krishnaswamy – Yeah. I feel pretty good about the technology. We’ve been at it for at least two and a half, three years. So we, in fact, actually have pretty good analytics around knowing peak times of what are the most popular shows, what are the most popular channels being watched, how viewership changes from device to device, etc.
And I’ll tell you, as we’ve been observing channel usage and program tune-in behavior, as an example on Xbox, even though we have a very similar set of channels as we have on the tablet, you see a completely different type of user behavior. Our peak times are generally after 10 p.m., because you’re attracting males between 18 and 35. They’re avid gamers or late-night comedy, drama, cartoon viewers.
The types of channels viewed on those devices are very different from the types of channels that you see on a tablet, where during the daytime the children are watching PBS or Disney and then at prime time you’re seeing more popular series, American Idol, those kinds of programs. It’s quite interesting to see that. We have a pretty good window into it.
So I would say technology wise we have all the right underpinnings. It’s all ready. It’s a matter of us getting the customers ready. That’s the most important thing. And now I think it’s a matter of us getting together as an industry and making sure we have all the right business negotiations in place.
SP – You mentioned the Xbox. So your FiOS mobile is available on the Xbox as well as the iPad. Are there other devices either in the mix now or coming into the mix soon?
Krishnaswamy – We have a number of other devices. We’re available on Samsung connected TV players and Blu-ray players. LG connected TVs and Blu-ray players as well. So we’re on most of the meaningful popular platforms that customers are using to consume content today. It’s increasing day over day. Android devices are selling like hotcakes. So we continue to keep deploying this content. We keep evolving and deploying to new devices constantly.
SP – One of the questions that have been raised around FiOS TV is the whole idea that there’s been a slowdown in the company’s fiber buildout. That has reverberated to suggest, well, maybe this isn’t a great business model. But, on the other hand there’s wireless and all these capabilities emerging with LTE.
What you’re describing wit FiOS TV is very upbeat as far as the take rates, the metrics around usage and now this new advertising capability that’s emerging out of the IP domain. How does this translate in terms of your company’s strategy? Do you see FiOS TV as being an expansive service going forward where Verizon wants to take a bigger role in the TV marketplace, or is it content to sort of stabilize around the markets it has now?
Krishnaswamy – I think at Verizon what we’ve realized is the growth and demand for mobile video is probably the most significant transformation change that has caused us to really look at our wireline networks, our wireless networks, really upgrade them and their capabilities and build platforms to be able to provide such high-bandwidth video consumption experiences. What we believe is that, at the end of the day, the customer’s experience is really a sum total of the way they lead their lives.
When I’m at home I want to watch my content on that 50-inch screen TV, and I want to get the top HD fidelity content. When I’m traveling I want that same level of flexibility to watch my favorite shows. And I shouldn’t be feeling that I have any dead ends in that process.
The FiOS triple play is an extremely successful part of our business. We were rated number one in consumer surveys. But the mobile aspect of that along with our 4G LTE network and applications available on it are equally important to becoming a more well-rounded entertainment service for our customers.
SP – And I would expect that that more well-rounded entertainment service also involves greater reach at maybe less cost for getting that reach and delivering that experience.
Krishnaswamy – That’s right.
SP – Well, thank you Maitreyi. I really appreciate your taking time to speak with us.
Krishnaswamy – My pleasure.