Why the cable industry should fear Verizon’s streaming video app

It's the holy grail for TV viewers who are fed up with sky-high cable bills: A do-it-yourself bundle made up of channels you chose. The problem? By the time you add up separate subscriptions to Netflix, Hulu, SlingTV and all the other streaming video apps you want, you may be paying the equivalent of a regular cable bundle, anyway. But Verizon may be poised to change that equation. Using technology it purchased from Intel in 2014, the telecommunications company has been open about getting into streaming media, too.

Whatever it comes up with, according to Chief Financial Officer Fran Shammo, might eschew a subscription fee. Shammo said he could see Verizon offering streaming video "not necessarily [on] a consumer-pay model" but using an approach that relies largely -- if not exclusively -- on advertising. That would make it much more affordable to sign up for apps like Verizon's, and hints at a future where cord-cutting isn't such an expensive proposition. The details of this model will prove to be extremely important, but the big takeaway here is that Verizon's service theoretically could be priced at zero (or in general, substantially less than the $15-20 per month many of the major apps such as SlingTV and HBO Now expect to charge). This won't lead to all the providers abandoning subscription fees overnight just so they can reach cord-cutters; after all, one of the best parts of watching HBO is that a full episode of "Game of Thrones" is, in fact, an hour long. If advertising can subsidize even a fraction of what would otherwise be a hefty subscription fee, it could change the math for potential cord-cutters. And if more apps successfully made the leap to ad-only or ad-first business models, consumers could be encouraged to flock to these services.