Verizon slashing 155 jobs from Go90

Verizon is slashing 155 jobs from its Go90 business as the company continues to try to expand into digital media and advertising.

Most of the layoffs are occurring at Verizon’s office in San Jose, California, and follows a string of acquisitions in the space, including October’s pickup of the web-video startup Vessel. Both Variety and The Hollywood Reporter were among the first to break the news.

Variety also reported that the OTT video service will be “rebuilt” by employees that came to Verizon in the Vessel acquisition.

“Our focus with go90 and our Verizon digital media efforts are to fulfill our strategy of leveraging Verizon content investments, enhancing user experience and strengthening our advertising infrastructure,” a Verizon representative said in a prepared statement. “Fulfilling this strategy has resulted in some duplicative resources and has required organizational changes impacting 155 employees as we consolidate offices in Los Angeles, San Jose and New York. These changes are not indicative to a change in our strategy and we remain committed to rapidly enhancing our existing online video products and delivering new products.”

Verizon launched Go90 in late 2015 in an effort to target millennials with video across networks and devices—particularly smartphones. It has moved aggressively to acquire talent for the business: In addition to the Vessel pickup, it hired Steve Woolf of AwesomenessTV a few months ago to oversee programming, and last July it named a former YouTube executive as chief content officer. And it brought the offering to market with an $80 million marketing campaign.

But it isn’t clear how successful that effort has been. UBS analysts said last June that Go90 faced “an uphill battle” against other mobile video and social apps, and CEO Lowell McAdam conceded that the service “did get a little overhyped.”

Go90 is a key component of Verizon’s broader strategy to build a digital media empire as growth in the U.S. wireless industry slows. Last year Verizon bought AOL for $4.4 billion, and may soon finalize its $4.83 billion deal to acquire Yahoo (although the future of that agreement is still uncertain following the major hack of Yahoo’s customer information).

Verizon’s strategy is notably more modest than that of AT&T, which recently launched DirecTV Now, an ambitious OTT offering built on last year’s $49 billion acquisition of the satellite TV provider, and hopes to double down on that move with its proposed $85 billion takeover of Time Warner.

Verizon said this morning that its digital media business generated $532 million minus traffic acquisition costs in the fourth quarter of 2016, but the carrier didn’t disclose specific revenue figures for Go90. Verizon may not be rethinking its strategy for video, but it may need to pursue the segment more aggressively as its core wireless service business struggles this year.