Earlier this year, Verizon launched its Custom TV skinny bundle allowing subscribers to pick and choose their own channels. In addition to a base package of channels that included local network affiliates for $54.99 a month, consumers could pick two additional packages at no extra cost whether it be a kids package, entertainment, lifestyle, news, pop culture or two sports bundles.
But a funny thing happened to Verizon. They found that while people would pick two additional packages, they would not go for a third which would cost extra. And those two additional packages would not include sports. So networks such as Big Ten Network, ESPN, FS1, NBCSN and SEC Network are being left out as consumers decide to go for the other packages instead.
Verizon Chief Financial Offer Fran Shammo said that this development was surprising to company officials:
“One of the disappointments was that, when you do Custom TV, you get a basic package and you get to pick two other packages. We thought people would pick three. People are only picking two,” Shammo said today during an investor event. “And what we’re seeing is, they’re picking more of the non-sports two, than sports. So the people who are going to Custom TV are generally people who do not watch a lot of sports. So that was kind of an insight that we didn’t have before.”
ESPN’s parent company Disney has sued Verizon saying putting the Worldwide Leader on a sports tier violates its agreement with FiOS. Even so, Shammo doesn’t appear to be worried about the lawsuit. He told investors that Custom TV has been successful, although there would be some tweaks to the bundles that would be available to consumers.
Shammo said one-third of Verizon’s pay-TV subscribers are opting for Custom TV which means they only want to pay for what they want to watch and apparently sports is not part of their equation.
Is this something that should concern the sports networks going forward? Perhaps. While sports fans are passionate about wanting to watch live sports action, there’s a large faction of Americans who don’t pay attention to them at all and they’re speaking with their wallets to Verizon. And it’s one reason why ESPN is fighting à la carte cable as it fears it will get left out if consumers are allowed buy the channels they want.
The Verizon sample is small, but one that has to raise a small red flag with the sports cable networks especially the ones hoping to get a foothold with the American people.