Verizon and AwesomenessTV have ditched plans to develop a premium video service in a move that underscores the carrier’s struggle to expand into media.
Verizon spent a reported $160 million a year ago to take a 24.5% stake in AwesomenessTV, a digital video company owned by DreamWorks Animation that targets teens and preteens. Verizon had said at the time that the companies planned to create “a premium short-form mobile video service featuring leading talent in front of and behind the camera,” with Verizon funding the project.
But Variety was among the first to report that the companies have scrapped those plans, and at least one TV executive that had been brought on to oversee the venture will depart.
“The most important part of the AwesomenessTV/Verizon go90 partnership is our premium content, and the success of ‘Guidance’ and ‘[email protected]’ have shown what we can do together,” the companies said in a joint statement. “Rather than launch a new and separate venture, we decided to instead double down on the Awesomeness episodic series output for go90 and also extend the term of our relationship to best build on the momentum we are seeing with our Gen Z target audience.”
Like its rival AT&T, Verizon is looking to digital media to grow its business in a U.S. wireless market that has become extremely competitive. It spent $4.4 billion to acquire AOL and its media assets in 2015, and it continues its negotiations to acquire Yahoo.
It has had difficulty growing a video business from the ground up, however. Go90, its OTT offering, appears to have struggled to gain traction, and UBS analysts said in July that Go90 had gradually picked up steam but faced “an uphill battle” against established mobile video and social networking apps and services. And the company conceded last month that it was slashing 155 jobs from Go90 due to “required organizational changes.”
Verizon remains the top U.S. wireless carrier, but it is increasingly threatened by T-Mobile and Sprint, both of which have seen their share of the postpaid smartphone market grow over the last year. Whether Verizon can leverage its huge customer base to gain significant traction in media has yet to be determined.