Verizon Executive Vice President John Stratton criticized the archaic state of the digital content market while speaking at an analyst conference held on Tuesday, with the 55-year-old referring to it as “a bubble” that needs to burst in the near future. The business model entailing subscribers paying for the majority of content from providers is extremely taxing on consumers, Mr. Stratton said, adding that a major disruption is required for the industry to move forward. The comments were likely alluding to an on-demand solution of sorts that would allow users to finance only the programming they’re actually watching while possibly eliminating major content bundles that are still an industry norm.
Mr. Stratton’s remarks were explicitly given in regards to the overall state of the market and not in relation to any specific business strategy from Verizon or its competitors. The EVP hence didn’t use them as a prelude to the announcement of some major business model shift on the company’s part, though such a development is becoming more likely as content costs keep rising on a regular basis. The largest mobile service provider in the United States is still overly reliant on its wireless business, according to some analysts, and is actually in danger of having its business suffer in the long term if it isn’t able to diversify its portfolio to a sufficient degree, especially in the aftermath of the failed merger between T-Mobile and Sprint that may prompt the two smallest national carriers to become even more aggressive in their efforts to seize market share from Verizon and AT&T. The latter has been more intense with its diversification endeavors in recent times, having spent big on the acquisition of DIRECTV and now seeking to do the same with Time Warner.
Whereas AT&T is committing significant resources to traditional programming, Verizon seems to be more interested in digital content and advertising, as suggested by its previous acquisitions of AOL and Yahoo which were recently combined into a unit called Oath. The division still pursues some conventional content endeavors but appears to be more focused on competing with the likes of Google and Facebook than traditional media creators. The pay TV market in the U.S. whose bundle-based business model was criticized by Mr. Stratton is also shrinking due to the cord-cutting movement and is unlikely to ever reverse that trend in face of disruptive technologies, though industry watchers remain divided in regards to predictions about whether Verizon can capitalize on that state of affairs.