Reports that Verizon is working on a web TV service sent Verizon shares higher and Netflix shares lower. The media has been focused on how this would impact Netflix, but the cable and satellite TV giants should also be in the spotlight.
Verizon
Netflix may have 23 million subscribers to Verizon FiOs' 5 million, but at the end of the day, Verizon is going after the $100 billion cable business, not Netflix's market share.
The idea would be for Verizon to offer movies and TV streaming over the web to some 85 million US homes where it doesn't currently offer its FiOs service.
The real threat is "cord cutting."
Companies like Comcast and DirecTV have been fielding questions about how they're holding on to their subscriber base on quarterly conference calls for years. Until now, the ominous idea of cord cutting has taken shape in the form of "cord shaving," or people downgrading to less expensive cable packages.
But it sounds like this would offer yet another a la carte option for premium content, similar to Netflix, and Hulu Plus. With all those services together, consumers who want movies and TV shows, could find real reason to skip their cable bill.
But pay TV companies still don't have to be *too* worried. Why? Verizon's reported offering still won't address the real reason for live TV — sports and news. And until Verizon can stream live TV, Comcast and DirecTV will have a real option. They'll have to worry if the likes of ESPN and the NFL launch more apps giving direct access to their content.
Netflix has a head start in the form of content deals with virtually every media company. To a certain extent, Netflix has done some of the hard work for Verizon — establishing precedent about how these deals are made. But Netflix has likely snagged exclusive access to content for a certain "window." Whether Netflix really suffers will depend on Verizon's pricing and how different the content is.
Hollywood Wins. The more different buyers for media giants content, the higher prices they'll be able to charge. They'll have to tread carefully to avoid alienating the pay TV providers as their content deals come up for negotiation. But for the most part, the more buyers, the better.
Questions? Comments? MediaMoney@cnbc.com
