Verizon's big attempt to get millennial viewers is going through a massive shakeup.
The company laid off 155 staffers from its streaming service go90 last week, which was first reported by Variety. Sources close to Verizon told CNBC said the majority of staff changes will be mostly on the go90 engineering team, and said new employees would be on-boarded from Vessel, a digital video service Verizon acquired in October.
Verizon confirmed the layoffs to CNBC on Tuesday, saying it wasn't a change of strategy but a way to bolster go90.
"Our focus with go90 and our Verizon digital media efforts are to fulfill our strategy of leveraging Verizon content investments, enhancing user experience and strengthening our advertising infrastructure," Verizon said in a statement to CNBC. "Fulfilling this strategy has resulted in some duplicative resources and has required organizational changes impacting 155 employees as we consolidate offices in Los Angeles, San Jose and New York. These changes are not indicative to a change in our strategy and we remain committed to rapidly enhancing our existing online video products and delivering new products."
Also Tuesday, the company reported fourth-quarter earnings per share of 86 cents, slightly lower than the consensus estimate of 89 cents. It beat on revenue, posting $32.34 billion versus the estimate of $32.09 billion. Shares of Verizon fell in premarket trading after the earnings report.
Go90 is Verizon's initiative to get millennial viewers and double down on its efforts to become a media and advertising powerhouse. The over-the-top video service doesn't require a cable subscription to watch content, and allows viewers to watch content whenever and wherever they want on their mobile phones. The company signed deals with millennial production companies like AwesomenessTV, Vice and Complex, among other sports, entertainment and TV content .
Now it is adding the services of Vessel, which was started by former Hulu executives Jason Kilar and Richard Tom. Vessel allowed users to watch content for free with advertising or pay a fee for early access.
"There really isn't a distribution platform for premium content for that audience," Brian Angiolet, Verizon's senior vice president of consumer product portfolio, told CNBC when the service launched in September 2015. "It's fleeing paid TV, and right now it's blowing out into the wind. We're trying to catch it."
But UBS and others have said go90 is failing to reach its target audience. Verizon's then chief financial officer, Fran Shammo, said during an early 2016 earnings call that the company did not expect go90 to be profitable for another two years. However, a company spokesperson said the service is seeing a boost in numbers.