Verizon also is more committed to mobile delivery than fixed. At the same time, the AOL buy puts Verizon into the mobile advertising business.
“AOL is a leader in the digital content and advertising platforms space, and the combination of Verizon and AOL creates a scaled, mobile-first platform offering directly targeted at what eMarketer estimates is a nearly $600 billion global advertising industry,” AOL says.
Given those beliefs, it might not be too surprising that Verizon is buying AOL, to support its digital media rather than linear video strategy.
The acquisition also is one way of avoiding a “dumb pipe” strategy where Verizon provides best effort, lower margin Internet access for consumers, but owns and benefits little from the value of applications.
Verizon would not be unusual in making investments in the digital media or advertising spaces. Many tier one service providers have launched investment funds, development efforts or made outright acquisitions of such assets. Singtel’s Amobee acquisition provides one example. Telefonica’s many development efforts an Deutsche Telekom’s acquisitions of firms such as Jajah provide other examples.
Some might argue there is no “fit” between the typical telco domain expertise and that of a firm such as AOL. “Over the top” is the crucial difference. So long as Verizon does not interfere with the running of the business, AOL is not a “managed service” sold only to Verizon customers.
It is a true, over the top service available to any potential user (consistent with copyright issues that could limit access in some locations).
As some might describe the strategy, it is not too complicated. “You need to own some of what you deliver over your pipe,” said Richard Green, former CableLabs CEO.