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Love, not money, rules at Verizon FiOS TV

Yesterday I wrote about how I expected there to be many new online linear TV channel deployments in 2013. To prove the point, Verizon and Samsung announced yesterday they were extending their relationship to make even more Verizon FiOS TV content available on smart TVs including 75 live channels. This is a big increase from the previous 26 channels and goes to show that Verizon has been very busy working with content providers to procure online linear channel rights. The pact with Samsung allows FiOS subscribers to watch this content on many Samsung smart TVs and blu-ray players.

Yet, this agreement with Samsung seems a little strange. Isn’t FiOS already on the TV through Verizon’s own STB? What exactly does Verizon, or its customers, gain through this agreement?

The most obvious advantage would be if it allowed Verizon to stop shipping set-top boxes to customers. This would save the company at least the cost of the box and potentially a trip to install it. Unfortunately, the company is very far from being able to drop its proprietary STB. Despite the big increase in content available through Samsung TVs the majority of content is still only available through a company-provided STB. As well, though Samsung is one of the biggest TV manufacturers in the world they still only represent, at most, 20% of the US market. What about all the people that don’t have a Samsung TV or Blu-ray player?

One reason given by the company is flexibility. Maitreyi Krishnaswamy, director of product development for FiOS TV, said:

“…we are providing more ways for our customers to enjoy their FiOS TV experience on their own terms.”

I wouldn’t call taking FiOS TV content from the TV through an STB to the same TV through a smart TV more flexible. In many ways it’s less flexible. Aside from the fact that a lot of the content is missing, to get to television a subscriber must click through the smart TV interface, find the app, wait for it to load and then choose a channel before she’s even watching TV.  Flexible, I think not!

There are some small gains for subscribers if they use the app. Samsung introduced unified voice search at CES this year. Using it, if a FiOS customer has Netflix and Hulu plus they can find a piece of content no matter which service it’s located in. But it seems a very small gain for the subscriber and potentially a big loss for Verizon. Does the company want to see $60-$80 FiOS TV service reduced to just another app alongside $8 Netflix? That might be a more appropriate role for the Redbox streaming service, when it finally arrives.

Perhaps I’m over-thinking this. Although there doesn’t seem to be a good business reason to move FiOS TV to smart TVs, maybe Verizon is simply thinking of its customers. How many of the 4.7M FiOS customers might actually be able to use the app? According to my estimations, only about 45 thousand FiOS customers are actually in a position to take advantage of the Samsung Smart TV app. (Thanks to The Diffusion Group for the data required to make this estimate.) This seems like a lot of effort to go through for just under 1% of customers. It also leaves me wondering why Verizon isn’t doing the same for its customers with the market-leading Vizio smart TVs.

I guess Verizon really does love its customers.

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