Verizon reportedly in talks to acquire video startup Vessel

Vessel's iPad app

Verizon is in “advanced discussions” to acquire Vessel, Recode reported this morning, as the carrier looks to expand its mobile video offerings.

Vessel was founded in 2013 by former Hulu CEO Jason Kilar as a way for content creators to make more money than they could on YouTube. The service offers free videos but also provides a $3-a-month subscription allowing viewers to see new content at least three days before it is released to the public.

Vessel has raised $132.5 million through two rounds, and its backers include Comcast Ventures, Greylock Partners, Benchmark and Amazon CEO Jeff Bezos. The company has been developing a “Snapchat-like” product that would mark a transition from its original strategy, Recode reported.

Video has become a primary focus for Verizon as it looks to expand beyond its traditional mobile business into digital media. The carrier recently agreed to spend $4.83 billion to acquire Yahoo in a deal largely centered on video, and last year it picked up AOL for $4.4 billion.

Verizon last year launched Go90, an over-the-top video offering aimed primarily at young mobile users. Go90 has yet to gain significant traction – UBS said a few months ago that it faces “an uphill battle” against YouTube, Netflix and other cross-platform video services – but Verizon remains focused on video and the advertising revenues it could generate.

“The consumer wallet spend on telecom products – and that includes cable, wireless and telephone – the percentage of spend by the consumer has not changed for 20 years,” Verizon CFO Fran Shammo said this morning during an investors conference in comments that didn’t address a potential Vessel acquisition. “It’s around 4 to 5 percent. And if you look at the shifting of that model over time, it went from telephone to cable, and now cable and wireless kind of share the bulk of that spend.”

Whether Verizon can capitalize on that market is far from clear, of course. Its experiment to deliver mobile video via Qualcomm's MediaFLO network was a disaster from the outset, and its attempt to monetize full-track downloads through its cumbersome Vcast Music was an unmitigated flop. But the nation’s largest mobile network operator is clearly willing to spend billions to prove it can become a digital empire to complement its wireless business.

For more:
- read this Recode article

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