Verizon added 20,000 Fios video subscribers in the last quarter of 2015. That was the lowest number of net quarterly additions since the service launched in 2006. Verizon has 5.83 million video subscribers. Globally, the total number of telco television subscribers continues to rise, serving 128 million homes.
Verizon added 99,000 Fios internet connections and 20,000 video connections in fourth-quarter 2015. It ended the year with 7.03 million Fios internet and 5.83 million video connections, up 6.3% and 3.2% respectively year on year.
The quarterly net video additions were down 82% on the same period a year previously, when Verizon added 116,000 video subscribers. It gained 178,000 video subscribers in 2015, compared with 387,000 the previous year.
“In linear video we are seeing slowing of market demand,” noted Fran Shammo, the chief financial officer of Verizon. “We are starting to see more and more customers coming into Fios on a broadband-only basis”, although current customers appear to be retain the television service. He said: “Most customers are depleting the voice side of the product and keeping the broadband and video side of the product at this point”.
Verizon plans to make changes to the Custom TV model, which allows customers to build their own channel packages. A third of new video customers opt for the Custom TV packages. “We’re going to refresh it so that we’re in compliance with our contractual relationships,” he told analysts.
He did not comment on ongoing litigation from ESPN, which claims Verizon is in breach of its carriage agreements by putting its networks in an optional sports package. However, he said customers wanted choice. “They don’t want to have to pay for bundles that they never use.”
Fios video penetration is 35.3% in its service footprint, limiting its opportunities for growth.
Verizon is in the process of selling some of its wireline business in Florida, Texas and California to Frontier, including around 1.2 million video customers, in order to concentrate on its operations on the East Coast. The deal is expected to close in the first quarter of 2016.
Total operating revenues in fourth-quarter 2015 were $34.3 billion, a 3.2 percent increase compared with fourth-quarter 2014. Of this, Fios internet, video and voice revenues contributed $3.5 billion.
So television may not seem so important compared to the rest of the business. The slowing growth in new video subscribers does not appear to particularly concern the company, in a market that has seen many of its competitors lose television customers.
Verizon Fios has been one of the more successful attempts to deliver telco television. It currently ranks sixth among service providers in the United States according to the informitv Multiscreen Index. It is just behind AT&T U-verse, which had 5.85 million video customers at the end of the third quarter of 2015.
Globally, telco television services are continuing to gain customers. Point Topic reports that IPTV subscriptions grew by 5% in the third quarter of 2015 to reach 128 million homes. Nearly half of them are in Asia.