Verizon reported its Q2 ’18 earnings this morning, which included a whopping $658 million pre-tax charge for shutting down its GO90 mobile video service (previously announced) that it launched less than 3 years ago, in October, 2015. If you combine the Q2 charge with the operating expenses, capital Verizon invested in GO90 plus the OnCue acquisition from Intel, it’s highly likely that the company lost well over $1 billion on the failed initiative.
For a behemoth like Verizon, a $1 billion loss barely registers. However, it’s almost certainly the biggest single investment any company has made to try to start a mobile video service from scratch (though former DreamWorks executive Jeffrey Katzenberg, whose NewTV startup has raised over $800 million could well take the crown from Verizon).
Given the magnitude of Verizon’s loss, it’s worth trying to understand how the GO90 bet went so wrong, so quickly. From my vantage point, there are 3 key lessons to be learned:
Ad agency holding company Publicis Groupe has signed on for a year-long commitment to go90, AOL’s new millennial-focused mobile video service. Publicis’ clients will have a 3-month exclusive on ad inventory starting in Q4 ’15. AOL and Publicis did not disclose the size of the commitment, but the WSJ reported it’s worth $50 million and includes 10+ Publicis clients.