UBS: Verizon's Go90 faces 'an uphill battle' against other mobile video and social apps

Verizon's (NYSE: VZ) Go90 is gradually gaining traction but faces "an uphill battle" against other mobile video and social networking apps and services, according to a study by UBS analysts.

In a lengthy report examining uptake of Verizon's mobile-focused video offering, UBS said Verizon's move earlier this year to zero-rate Go90 data resulted in a "brief uptick" in iPhone downloads compared to other entertainment apps. The app "neared its highest ranking to date" compared to all free apps in early April, rising to #202 in Apple's App Store and ranking #13 against all iPhone entertainment apps at the time.

"We believe this may have been driven by a ramp-up in marketing spend and/or heightened interest in a specific and time-sensitive event (in this case, the NBA playoffs)," UBS analysts wrote. Verizon began streaming NBA games through Go90 earlier this year. "In the weeks since, download rankings have declined. Go90 is currently near #600 vs. all free apps and around #40 vs. all Entertainment apps…."

The findings echo results from a March study by UBS gauging the success of Go90. Both studies analyzed daily rankings and download estimates for Go90 and roughly 40 other video and social networking apps since Go90's October launch. While UBS' analysis was limited to Apple's storefront, the firm said it has found that iOS download trends are similar to those in Google's Play store.

"With these rankings, we remain convinced that Go90 has an uphill battle if it is to become a meaningful competitor to the established mobile video and social networking leaders, namely YouTube, Facebook, Instagram (owned by Facebook), Snapchat, Netflix and Hulu," the analysts wrote. "The app (Go90) did somewhat better in its second month, when Verizon ramped up spending on advertising, but never made it into the Top 10. Since then, peak rankings have remained stable to slightly improving, but they are surrounded by declines (presumably when Verizon eases off the marketing spend), and the app continues to rank only in the mid-teens at best."

Verizon CEO Lowell McAdam said last week that the carrier is pleased with the uptake of Go90, but he acknowledged that the offering has drawn more publicity than intended. "It did get a little bit overhyped, and we contributed to that to some extent," McAdam said during an investor conference.

McAdam also conceded that developing popular content is "not exactly our strong suit."

Indeed, U.S. carriers have long failed to monetize content -- particularly mobile video -- directly, but that hasn't stopped some of them from pursuing the medium aggressively. T-Mobile (NYSE:TMUS) seems to have found success with Binge On, a zero-rated offering that doesn't generate revenue directly but rather is aimed at luring new customers and keeping them with the carrier, as well as reducing the load on T-Mobile's network.

Interestingly, UBS said its analysis of data from Ookla's Speedtest suggests Binge On usage may be slowing network speeds in some markets, potentially posing a threat to customers' data experience.

Meanwhile, AT&T (NYSE:T) is preparing for the launch of its three-tiered DirecTV-branded offering later this year, and Verizon continues to pursue an acquisition of Yahoo's internet assets in a move that would greatly expand its media business. Whether Verizon could capitalize on Yahoo's substantial online audience is far from clear, however.

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