News broke today that Verizon is launching FiOS Custom TV, a package of basic cable channels plus two ‘addon packs’ that will retail for $55. The news was heralded as Verizon heading off cord cutters.
The notable piece of the announcement was that of the 2 packs offered there were Sports and Sports Plus. Sports will carry ESPN, Sports Plus will carry regional sports.
This is interesting because analysts have been pegging ESPN’s value alone at about $35 per month and the regional sports channels as a group would be worth something similar.
If that’s true, Verizon is now essentially giving away other cable channels AND allowing their subscribers to take ESPN alone (basically – they include some other channels in there too but by pricing its just ESPN plus others for free).
Verizon is uniquely positioned, offering wireless and internet, so it needs less cable revenue than say Comcast or Dish or DirectTV.
The move to price such valuable channels so aggressively should be a big wakeup call for the cable industry. While it will probably slow subscriber loss in the long run how long will it be before people say $35 for ESPN on a TV isn’t worth it, instead wanting it on their phones and laptops instead (where they can Chromecast or screen share to a big TV)?
The cable business needs to figure out an online model for live sports immediately, before someone else comes over the top and reduces them to mere providers of internet access.
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