Verizon Communications Inc. (NYSE:VZ) has announced that it will be launching its own digital video service by mid-2015, which must make Netflix, Inc. (NASDAQ:NFLX) and the likes, really fearful. Whereas Netflix, Inc. (NASDAQ:NFLX) is just a streaming service which has little to no control over the infrastructure, Verizon Communications Inc. (NYSE:VZ) owns the infrastructure that is required to provide digital video and stream content. The announcement of Verizon Communications Inc. (NYSE:VZ) getting into this industry came from none other than its CEO, Lowell McAdam, who was speaking at an investors conference. David Faber and Jim Cramer discussed recently discussed on CNBC, how Verizon Communications Inc. (NYSE:VZ)’s entry will change the digital video industry and how will it affect Netflix, Inc. (NASDAQ:NFLX).
Faber highlighted that that it’s not just digital video companies, but content companies too, are taking digital video and streaming service seriously. The companies understand that the preference of users has changed, especially those who are in their teens. Whereas earlier, people use to pay for their cable connection to watch the content on their TVs, nowadays most youngsters go to the Internet and watch the content they prefer for free, with a small minority subscribing to Netflix, Inc. (NASDAQ:NFLX) or other services. Most media companies are worried how they will monetize this upcoming generation and find over-the-top digital video as the way to proceed for the future.
Cramer agreed with Faber and elaborated on his current TV viewing habits as a testament to prove that viewership as a whole is changing and people nowadays are more likely to watch something on their computers, smartphones or tablets, than on TV.
“[…] I am clicking on tweets and watching clips and then going to where I have to go and that is how I watch my ‘TV’,” Cramer said.
As of June 30, 2014, Philippe Laffont’s Coatue Management owns over 2 million shares in Netflix, Inc. (NASDAQ:NFLX) and Warren Buffett’s Berkshire Hathaway owns over 15 million shares in Verizon Communications Inc. (NYSE:VZ).