Verizon Communications (VZ) is rolling out a new pay TV plan that allows consumers to choose every month bundles of channels they want to see, hoping the flexibility will lure customers away from cable rivals and upstart Web TV companies.
The move is a small step in the direction of ‘a la carte’ programming, which means allowing customers to build their own pay TV service, channel by channel. U.S. television networks have long resisted ‘a la carte,’ in part because of concerns that subscribers will drop less popular channels.
Verizon said its new “Custom TV” packages start at $65 a month for broadband service, 36 fixed basic channels and two genre-based channel packs, such as a sports bundle or kids channels. Users can add extra packs for $10 each, or swap or unsubscribe any pack after 30 days. Verizon has seven channel packs in total.
Verizon is targeting consumers looking for something in between fully loaded cable and satellite TV packages, and “skinny” or smaller, cheaper bundles offered Comcast Corp or Dish Network Corp’s online Sling TV.
“Everybody is getting into the video space… increasingly customers are saying, ‘I want to pay for what I view,'” Tami Erwin, the president of Verizon’s national operations told Reuters.
Verizon’s FiOS is the sixth-largest U.S. pay TV provider by video subscribers, according to research form IDC. The rise of online video services such as Netflix (NFLX) has put pressure on pay TV providers to innovate.
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Analysts said Custom TV could help Verizon better compete against cable rivals.
“It’s not a pure ‘a la carte’ the way some consumers want, but we are certainly through the Verizon offering going to have more choice and the type of choice that has not been associated with traditional pay TV services,” Greg Ireland, a director at market research firm IDC said.
Dish’s Sling TV offers a fixed set of basic channels at $20 a month, and genre-specific bundles can be added for $5. The service runs on an Internet connection that a user needs to pay for separately.
Chris Young, an analyst at research firm SNL Kagan, said Verizon is trying to give customers more customization and the greater amount of flexibility “could prevent some customers from cutting the cord.”
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