Verizon doesn’t expect Go90 to be profitable for at least two years
The millennial-targeted Go90, which is owned and operated by Verizon, arrived in October 2015 as video streaming service limited to use on mobile devices. Verizon created Go90 because the company knows that video is on the rise and phones are the one thing that youngsters bring with them everywhere. Combine the two and you should have a valuable platform to generate big dollars. But, at least for Verizon, that doesn’t seem to be the case just yet. Big Red does not expect Go90 to be profitable for at least two years, focusing on content and marketing in the meantime.
Verizon CFO Fran Shammo said that Go90 will be applying “bottom-line pressure” to the company, but the long-term benefit is from getting engagement from millennials that are often hard to reach. The executive also made it clear that the service is already getting excellent engagement, which is “important because that’s viable to the advertising community.” So the apparent reason, as Verizon admitted, for Go90’s lack of profitability is expenditures.
A lot of money is being spent to win rights to properties and promote the service. That second part, regarding marketing, is interesting because Verizon has committed itself to not promote Go90 on television. The company is instead choosing to go right to where millennials live: social media. And it’s almost strange because Go90 has a combined 100,000 followers/likes on Twitter and Facebook. Where is Verizon promoting Go90? The Android app has less than 1 million installs while both Google Play and Apple App Store listings for Go90 are filled with negative reviews.
It must be the rights fees that are keeping Go90 from being profitable at this time; however, Verizon was proud to state in October that it was paying for individual shows rather than negotiating to get full network and studio packages. Go90 has programming hand-picked from ESPN, Discovery, Comedy Central, and more. Verizon also inked a massive deal with the NBA that could be pricey considering the terms.
G090 has already bested internal expectations, likely due to its unrestricted availability, and Verizon elevated goals for 2016. Verizon, though, has the luxury of deep pockets keeping Go90 up and running until it can sustain operations from its own ad revenue.
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