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Eyeing Millennials, DIRECTV readies Hispanic OTT play

Hispanic powerhouse Univision has signed a deal with DIRECTV to give the satellite operator the go-ahead to include its content in a Latino-focused over-the-top (OTT) video service called YaVeo.

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Eyeing Millennials, DIRECTV readies Hispanic OTT play

Michelle Clancy
Hispanic powerhouse Univision has signed a deal with DIRECTV to give the satellite operator the go-ahead to include its content in a Latino-focused over-the-top (OTT) video service called YaVeo.

The deal includes rights to Univision’s broadcast network, two local stations and Spanish-language cable net Galavision. The service will be launched later this year and will consist of “low-cost” online channels; and while Univision is the big Kahuna from a content perspective, DIRECTV is in talks with other Hispanic media companies to beef up the offering.

The news comes as competition ramps up. DIRECTV’s main rival, DISH Network, mulls an OTT play itself. In March it renewed its agreement with the House of Mouse for carrying sports, news and entertainment content from ESPN, ABC and Disney across televisions, computers, smartphones, tablets, gaming consoles and connected devices. But, the expanded deal now also grants DISH the rights to stream cleared linear and video-on-demand (VOD) content from the ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2, as part of what it calls “an Internet delivered, IP-based multichannel offering” — i.e., an OTT service. It has signed a similar deal with A&E Networks as well.

And, Verizon Communications is mulling its own mobile OTT service, integrated with Verizon Wireless network services, to launch in the middle of 2015. The telco is in the latter stages of negotiations with the major content providers ahead of the launch (that would presumably be Disney, NBCUniversal, Viacom, FOX, Time Warner and so on).

"I think over-the-top video is right around the corner," CEO Lowell McAdam said at the recent Goldman Sachs investor conference. Referring to the buy of Intel’s OnCue digital video division, he added: "We've got the assets in place, and I don't feel we need an awful lot more."

Providers are feeling the heat when it comes to maintaining a subscriber base as the younger generation comes into the market. To wit: According to nScreenMedia, 19% of millennials are living without pay-TV; out of those, 98% say they have no intention of getting it.

"A big part of the problem is that these young viewers have grown up in the interactive world of the Internet and mobile phones," said nScreen analyst Colin Dixon. "The passive television experience is simply not interesting to them. For the generation reared with a smartphone in almost constant contact with their friends, media consumption is rarely an entirely solo experience. Their opinions are as much a part of the experience as the media they are consuming."
McAdam noted that Verizon is keenly aware that OTT is important in order to woo and keep the younger generation of Millennials. To that end, the telco’s OTT content will be important in targeting younger viewers, with selections like DreamWorks Animation's AwesomenessTV, combining a range of on-demand content and live channels.

"We would all like to find a way to serve Millennials," said Mike White, CEO of DIRECTV, adding that programming costs necessitate that niche plays will be  the way to do it.

The Spanish language market is generally younger and more likely to turn towards the Internet for entertainment anyway, rather than opting for traditional satellite services that prove to be expensive.

When it comes to the stock implications of all of this, investors should take a wait-and-see approach, according to Wall Street watchers.

“With a merger in the process and the launch of a new service on its way, investors are waiting to see how things might pan out before they consider investing in the share,” said analysts at FNF Solutions.

“DirecTV has reported some very strong results in the previous quarter, with earnings per share up by 35%. For the moment, investors should hold shares of the company to see how the launch of their new service will impact revenues and bottom lines. Investors who are looking for opportunities to invest their cash would find it wise to wait until the service is launched and its results are reflected in the financial results by the end of the year. Only if the services are making a significant incremental dent in the revenues and bottom line of the company, will the share be a buy for investors.”