Verizon Bags Yahoo, But We Question the Strategic Rationale

Further, Yahoo has also struggled to create a meaningful video content business, failing with original productions, such as the television series Community and its foray into NFL broadcasts last year. As such, we doubt Yahoo will contribute much to any improvement in Verizon’s Go90 offering. We remain skeptical of Verizon’s video efforts, as other competitors in the video market enjoy far greater insight into viewing habits or enjoy the benefits of an open platform, such as Facebook and YouTube.

Verizon does receive additional ad technology to augment AOL, including the Brightroll programmatic platform. Though we’d prefer that Verizon stick to its knitting in the telecom business, where it possesses clear competitive advantages, we believe the firm has some chance of success in building an ad platforms on top of its networks that bring unique capabilities to the market. Here again, however, we fear that an emphasis on owned content, coupled with Verizon’s network position, creates the potential for perceived favoritism that could hinder the firm’s ability to attract advertisers and content owners to its platform.

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