Part Eight: Launching without a Library or, Decanting the Insalubrious

Note: This post, this website in general, does not represent the views of anyone. Including myself. Especially this post! This is a naughty post and should be disregarded at all costs. I LOVE YOU VERIZON. I dunk on you because I CARE.

So far I've focused on media consolidation. Film and Television studios coming together and merging their content libraries. Content Producers purchasing Television Networks to offer their content more cheaply to Distributors. Distribution companies buying those libraries to distribute them "in house" but still using their own companies as a distribution service. Followed by non-studio companies realizing that streaming was a legitimate option and studios pivoting to Direct to Consumer opportunities in response.

Whew.

So let's sink into that era from 2007 (the launch of Netflix streaming) to 2017 (when CBS All Access released its first DtC original programming), when the Big Three streaming services ruled online content distribution. Netflix, Amazon Video, and Hulu had their low-volume but high-quality original programming, which was bolstered by high-volume licensed premium content (Netflix & Amazon) and "direct" distributed high-volume library content (Hulu). In this era, there was a brief race to become the next Netflix, Amazon Video, or Hulu... to make the Big Three a Big Four.

One of the industries that was very familiar with the streaming software services was the tech industry, the people and organizations who were writing the backend code that allowed the Big Three streaming services to store, encrypt, and play their media from cloud storage across thousands of individual end users. For example, companies like plex (founded 2009) provided streaming software to many streaming services and launched their own Freemium SVOD service, licensing content from other companies. But the example we're going to talk about today is...

In 2014 semiconductor company Intel Corporation sold the development plans of its upcoming streaming service OnCue to mobile telephone company Verizon. Verizon had a consumer base of millions of American subscribers already paying for a monthly data plan. They had the infrastructure to distribute content wirelessly. Why not use that data plan and wireless infrastructure to stream low-volume but high-quality premium original content? This gives your service a premium feel, (once startup costs are gone) free advertising, and (down the line) some extra to charge for later. It would be like Netflix, Amazon Video, and Hulu... except mobile and without all the "dead weight" as it were. The rest of the library could be licensed "non exclusively" meaning that other streaming services could host it as well. They re-branded OnCue as go90 (a somewhat oblique reference to turning your phone sideways 90 degrees to get a widescreen image instead of vertical video).

The service needed some content and whatever meager media contracts that Verizon inherited from their earlier purchase of AOL was not enough for even an initial launch offering. Verizon grabbed business and production talent from NBCUniversal and YouTube and began producing a few dozen original, serialized shorts. On one hand, Shorts (anything less than 20 minutes) are great because they are cheap, easy to distribute on a 4G signal, and appeal to a younger audience whose advertising tastes are still fluid.

But the downsides were startling and began piling up. Short form content no matter how slickly produced always has that feel of art house or academic, always a turn off for American audiences. Additionally, short form content inherently is difficult to categorize, hampering metadata usage. This lead to poor "what to watch next" suggestions as well as reporting back valuable viewership information to producer and advertisers. Additionally American audiences still tend to consume most of their media at home. Without a major shift in American mobile media consumption habits and without Verizon quickly releasing a verified go90 app onto Roku-like devices and smart televisions, they ham-stringed their abilities to reach a wider audience.

One of their key shortcoming harkens back to an example from earlier on this website. When Warner Bros purchased Six Flags outright, they had no previous experience running a collection of theme parks and did not properly set up a an internal system for doing so. Sure, Verizon had hired outside talent to manage go90, but they never really set up a proper semi-autonomous division with independent workflows for those individuals, who were reporting to the Verizon's Consumer Products division. They needed a fix and fast.

In late 2016, Verizon attempted to rectify this problem by purchasing another up-and-coming streaming service, Vessel. Vessel was the brainchild of Jason Kilar and Richard Tom, both former Hulu executives. Verizon was not so interested in Vessel's unique streaming gimmick "subscriptions were used to receive priority access to its channels' newest content" (which first honestly just sounds like you're begging for piracy and second you don't want to unnecessarily paywall and reduce your largest possible audience when your service is niche / just starting up) and immediately trashed that "feature" by shutting down the entire service five days after purchase. Verizon was instead focusing on acquiring Vessel's employees and proprietary corporate lines of business to serve as go90's new and badly needed semi-autonomous division. The original go90 staff was laid off and the keys to the go90 kingdom were passed onto the former-Vessel employees.

With Vessel's structure came a renewed attitude as well as more inside-the-entertainment-industry deals. Where cost was no object before the Vessel acquisition to mitigate the startup timeline, cost became no object again in order to expedite a whole slew of new, premium, A level talent content. Ben Affleck and Matt Damon's show The Runner, Rob Gronkowski's MVP, Hasbro's Transformers: Prime Wars Trilogy, and Capcom / Machinima's Street Fighter: Resurrection were just a few of the series-length shows to appear on go90.

And yet while the acquisition of Vessel ruthlessly solved a handful of the issues, two glaring issues remained. First off the limited distribution avenues by making the service only available to Verizon customers (non-Verizon customers could not buy a streaming plan) who only could view it off their mobile phone (no Roku-type app existed). And secondly, content. Americans love to binge, either by turning on a TV and just letting it play in the background or by firing up 180 episodes of Seinfeld (or any deep-library TV series) on an SVOD service and letting it go, baby. Having only a handful of series, padded with nonexclusive content that could be found anywhere else, does not lend your streaming service towards binging. Costs were up and subscriptions were not growing.

A few hail-mary passes were made: Verizon-owned tumblr and Yahoo! began distributing go90 content internationally, as an attempt to get extra viewership without breaking any domestic distribution agreements. But it was too little, way too late. They would not budge on non-Verizon avenues of distribution and there were no serious attempts to exclusively license deep library content.

$1.2 billion in the hole from the purchase of OnCue, Vessel, and making the expedited Hollywood deals, one year and five months after the Vessel purchase Verizon shut down go90 and sold off its production studio to Viacom.

So now in 2020 with Direct to Consumer streaming distribution drying up the nonexclusive and exclusive content licensing contracts, non-studio players who have relied on licensing contracts like (Netflix and Amazon) and non-studio players who have relied on high-quality, low-volume content (like Apple) should take heed on Verizon's go90 mistakes. One of the major concerns, avenues of distribution, has been surely settled. All these services have apps for almost every device. But two of go90's problems still haunt these non-DtC services: Amazon and Apple, the two tech companies, have an imperative to further solidify their streaming service's independence and divisionification within their parents' corporate structures. And secondly, all three of them to ensure their permanent survival need to acquire deep libraries. And only a handful remain...

As a final note, a POSTSCRIPT if you will, remember Hulu and Vessel executive Jason Kilar? When Verizon bought Vessel and folded it into go90, Jason left Verizon. Where did he go, you may ask? Well, Verizon rival at&t announced earlier this month that Jason would be placed in charge of at&t asset and one of the five content libraries: WarnerMedia.

It's all about those content libraries. That's the open secret, Cap.

Coming up next!

• Who else made mistakes? Dare I say? I dunno man I don't wanna be BANHAMMERED 5eva
• You mean like Fox? SHHHHHHHH
• I'll happily give you the BORING inside information!
• Can you talk some more about theme parks and cross-media usage of intellectual properties? You bet your sweet bippity!
• Ultraviolet? Redbox? COLORS!
• And mmmmmmmmmmmmmore!