Cord cutting is eating into pay-TV subscriptions like a disease, and it's apparently breached the fortress walls. The director of Verizon's (NYSE:VZ) FiOS TV, Maitreyi Krishnaswamy, admitted at a conference last week, "I've pretty much cut the cord."
It's telling for the traditional pay-TV market when a top exec at one of the leading providers doesn't even use her own product.
But Krishnaswamy and Verizon have been preparing for cord cutters since 2013, when the company launched a streaming service with Redbox to rival Netflix. That service was shut down at the end of last year, replaced by a new streaming endeavor: Go90.
Verizon isn't the only one admitting that cord cutters are a problem. Comcast (NASDAQ:CMCSA) launched Stream TV last month, and DISH Network (NASDAQ:DISH) launched Sling TV at the beginning of the year.
Will these efforts help the traditional TV providers stave off complete infection from cord cutters?
Verizon is going after cord-nevers
All three of the aforementioned pay-TV providers have taken different approaches with the growing over-the-top video market. With Netflix providing such strong competition, all three want to avoid producing an also-ran service.
Verizon's Go90 collects clips from several television networks and well-known online video creators. Its focus is on discovering and sharing content, making it easy to share clips on social media. The latter feature provides a viral aspect to the app.
Go90 is designed to attract a young audience, the group most likely to never subscribe to pay-TV in the first place. Verizon's strategy is mostly about branding, as it's available to all smartphone users regardless of their affiliation with Verizon's phone or Internet service.
Comcast aims to keep control of its customers
Comcast is taking the opposite approach. Stream bundles live streams of the major broadcast networks and HBO. Subscribers will also have access to HBO's over-the-top service, HBO Go. Considering HBO charges the same price for its stand-alone OTT service as Comcast is charging for Stream, it turns out to be a pretty good deal.
The catch is that you must be a Comcast Internet subscriber to access Stream. That's how Comcast plans to make money on the OTT service, by maintaining control of the pipe.
DISH looks to provide value
DISH has taken the boldest approach with Sling TV. It offers two dozen top cable networks streamed over the top for just $20 per month. Subscribers have the option of adding on different packages for an additional $5 or HBO for an extra $15. DISH is positioning it as a complement to more mainstream streaming services such as Netflix and the free over-the-air broadcast networks.
DISH is able to offer these prices on its streaming service, which is a legitimate replacement for cable, because it saves on customer acquisition costs. If a customer signs up for satellite TV, the company typically spends $800 in marketing and installation on that customer before even seeing a dime come back. The overhead for Sling TV is much smaller, enabling it to charge less per month.
Staving off infection
None of these things is a complete antidote for cord cutting, which is a problem for all three companies. With Krishnaswamy becoming a cord cutter herself, she understands the needs and desires of cord cutters. That could help Verizon produce a product that addresses those pain points instead of its existing foray into OTT video streaming.
If not, Verizon risks losing out on the valuable streaming market as competitors such as Comcast and DISH move in with higher value and stickier products.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.