Are 20 Channels the New “300?”

Consumer dissatisfaction with packages of linear video can be summed up in the phrase “500 channels and nothing on.”

Count Dish Network and Verizon among the firms that think the answer is 20 channels, delivered over the Internet or a mobile network.

Skeptics have estimated the market for a 20-channel streaming video service is only about five million customers in the U.S. market. Of course, that would be understandable from suppliers of the traditional linear video packages sold to well over 80 percent of U.S. households.

Verizon seems to believe the primary market is Millennials who do not subscribe to traditional linear video subscription services, and particularly single-person households.

Dish Network, on the other hand, which plans to launch its service late in 2014, seems to be focusing more on sports, entertainment and children’s programming appealing to young adults who love sports and have kids but won't pay $100 a month for TV.

Dish has been aiming at a service costing perhaps $20 to $30 a month.

As always is the case, success hinges on willingness of the content owners to license rights to Verizon and Dish, followed closely by the value-price proposition. But Verizon expects to launch a 20-channel streaming service in 2015.

Verizon says it will offer major broadcast channels plus some custom channels, such as DreamWorks Annimation’s AwesomenessTV targeted at Millennials.

As you might guess, mobile delivery is a key channel for Verizon, in part because that allows Verizon to market nationwide to a hard-to-reach customer segment while adding distinctiveness for its mobile offering.

“No one wants to have 300 channels on your wireless,” Lowell McAdam, Verizon CEO said. The issue is what a transition to full a la carte access might look like.

But count Verizon in the camp that believes early audiences will include Millennials accustomed to viewing video on smartphones and tablets.

Verizon also believes it will make better profit margins, longer term, on Internet access services than video entertainment.

“Nobody makes much money at this point in distributing content,” McAdam argued.

AT&T has a contrary view, of course. AT&T’s bid to buy DirecTV is a big bet on the continued viability of linear video.
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