Verizon has invested a fortune in its new FiOS TV service, which is supposed to offer TV watchers an alternative to cable and satellite. But it may be that what TV watchers really want is a free TV — and without one, they’re not very interested in switching.
One of the surprises from Verizon’s (VZ) second quarter earnings: Far fewer people signed up for the telco’s FiOS TV service than Wall Street expected.
During Q2, Verizon added 176,000 net new FiOS TV subscribers, down 33% from 263,000 in Q1 and 226,000 in Q4. The 176,000 missed RBC’s estimate (273,000) and Goldman’s (230,000) by a wide margin.
One of the explanations Verizon provided: It had stopped bribing people to ditch their cable companies with free hi-def TVs.
CFO Doreen Toben:
“The sequential decline in FiOS net adds was due primarily to a lower level of promotions, marketing and advertising activities during the quarter. For example, we ended our free TV offer.”
COO Denny Strigl:
…”FiOS net adds in the second quarter were actually about what we had expected coming off of the very good first quarter, which was that free high-def TV.”
Does Verizon really have to sweeten the deal that much to steal customers from cable and satellite? If so, that’s hardly something to get excited about.
We do expect to see numbers rise this quarter — Verizon has promised increased marketing, and will launch FiOS TV in New York City, where the telco hopes to have 500,000 FiOS-ready homes by the end of the year
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