Verizon Breaks Pay-TV Bundle as Competition Mounts

Friday, Apr 17, 2015

 Verizon Communications Inc. said its FiOS service will offer new TV packages aimed at giving customers flexibility to purchase only certain groups of channels they want to watch, the latest sign of how pay-TV providers are adapting to stepped-up competition.

Starting April 19, consumers will be able to sign up for a slim package of TV channels that includes broadcasters such as ABC and Fox, as well as CNN, AMC, Food Network and others. They can then add on “channel packs” covering various genres, such as sports, kids, pop culture and lifestyle.

FiOS’s cheapest plan will cost $55 a month and will include two channel packs. Each additional package, which can consist of about 10 to 17 channels, will cost $10 a month. Customers will be able to switch to a different channel pack after having one for 30 days.

“Customers want flexibility to turn channels on and turn channels off,” said Tami Erwin, president of Verizon FiOS, which serves around 5 million video subscribers.

The move comes as pay-TV distributors such as Verizon are facing mounting pressure to give consumers more choice in how they buy TV, instead of requiring them to purchase a large bundle of channels, including many they don’t want.

Ms. Erwin cited Nielsen’s report last year that showed that the average number of channels Americans receive has increased over five years by 46% to 189 in 2013, but they still only watch about 17.

Underscoring the threat to pay-TV distributors, consumers are beginning to “cut the cord” in favor of more affordable online services such as Netflix Inc. and Hulu LLC.

Meanwhile, new entrants from the Web are shaking up the marketplace. Dish Network Corp. ’s streaming service Sling TV, for example, allows consumers to mix and match tiers of channels on top of a $20-a-month core package. Apple Inc. is planning a TV service offering a “skinny” bundle of channels in the fall, people familiar with the situation have said.

Operators have already been slimming down their offerings to cater to cost-conscious customers. Comcast Corp., for instance, offers a skinny bundle of TV channels with HBO and fast broadband.

The plan Verizon announced isn’t a full move to “a la carte” pricing—allowing customers to pick each individual channel they want. That is a model some lawmakers and consumer groups have pushed for over the years, with media executives arguing it would wreak havoc on the industry and be worse for consumers.