The “Verizon Buys AOL” news has been hitting the airwaves for almost two weeks now. The original bit of news said that Verizon had agreed to pay $50 a share which would come to around $4.4 billion dollars. Since that announcement on the May 15, AOL shares have risen about 25 cents. Verizon shares have stayed pretty steady around the same price. It seems that those that buy and sell stock are like and not really sure what this is going to mean for everyone. Let’s talk about what we do know about the deal and do a little speculating about what it might mean for you.
Going Online Used to Mean Logging On to AOL
Back before the Internet that we know today started taking hold, “going online” usually meant logging in to one of a couple of “online services.” You could read the news and watch video clips of events, send and receive email, play games, shop, and many other things, all within the same interface. AOL became the dominant provider. So dominant in fact that its “You’ve Got Mail” email notification became so well name known Hollywood borrowed it for a movie title.
Even after less expensive Internet Service Providers (ISPs), and some would say higher quality and safer, became commonplace, AOL’s popularity hung on. The company changed with the times. You didn’t need them to get online anymore, but they still needed you to remain in business. They realized that people still want to have quick and easy access to the information sources they like, so the AOL Web Portal does just that — it functions as your very own highly detailed and extremely customized one stop information location.
Verizon’s Been Wanting a Few Things AOL Owns
Verizon’s been one of those companies that took over the job of getting AOL customers onto the information superhighway and in the right lanes to go to “AOL World” where their “stuff” that’s left over from when they dialed in to AOL’s servers. This put them in the perfect position to see how valuable AOL customers are.
Those AOL customers are the first thing that Verizon wants a crack at. Stick some juicy and lucrative advertising on those pages that all those AOL customers go to and you’ve got an excellent revenue stream.
AOL is also a content treasure trove. They’ve got tons and tons of content that is all over the board as to what it is. AOL concerts. AOL special productions. News clips. “Stuff” that people want to see and Verizon knows they’re willing to pay to see it.
‘Verizon Buys AOL'” Means Easier Access to ‘Over-the-Top’ Content Delivery
AOL is almost like Netflix when it comes to what the industry is calling “over the top” applications. These are applications that require someone else to facilitate the delivery of what you want. Netflix is a prime example-They’re separate from your ISP (Verizon) but need the ISP to get their content from their data storage facilities to in front of your eyes. In other words, Netflix sends their movies to you over the top of the Verizon/TWC/Comcast/etc. pipes.
Verizon already owns the pipes that AOL’s content runs on. It’s continuing the rollout of FiOS meaning customers (eyeballs) will have more access to more revenue-generating ad content. Early talk is the “Verizon Buys AOL” news is good news for Verizon. Three access models for access to the content the AOL buyout gives Verizon springs to mind:
- A premium subscription model for most of the content
- Ad-based revenue model for content access pages and non-subscription viewing
- Pay per view for special content
Because their audience is a captive one, this takeover should position Verizon well to capitalize on the mobile media and advertising and connected TV sectors. This can positively impact Verizon’s bottom line. Other mobile carriers are running promos that are hurting Verizon. The revenue increase from this buyout could translate into lower prices for mobile customers in the mobile pricing wars.
More Enjoyable Access to AOL Content for Verizon Customers
If you’ve been around much recently you’ve heard a bit of the “he said, she said” argument going on between ISPs and content providers. Customer satisfaction is on the decrease and both sides are very quick to blame the other. Companies like Netflix are blaming providers like Comcast and Verizon while the providers are blaming poor quality network backbones owned by the content providers. The truth of the matter is they’re both at fault. Verizon’s going to find that out (or realize it) I think when customers start complaining about network problems getting to AOL content.