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Verizon Digital Media Services, a business unit of Verizon Communications Inc. (VZ - Analyst Report) which oversees digital content services has acquired U.S. based upLynk, a technology company specialized in adaptive streaming and television cloud services. The acquisition is expected to boost Verizon’s growing market share in data and cloud services as it will enable delivery of digital content to all devices and platforms complementing its Digital Media Services.

Given the surge in demand for online video streaming thanks to latest developments in technology, Verizon is focusing on growing its Digital Media Services business backed by its robust network. Launched in 2011, Verizon’s Digital Media Services has enabled advertising, entertainment and media companies deliver live and on-demand, customized video content to consumers through multiple devices such as TVs, smartphones and tablets.

We believe that with the latest addition, Verizon will be able to integrate its advanced infrastructure with the simplified video streaming solutions and cloud-based broadcast technology of upLynk while leveraging its own video platform and global network. Nevertheless, Verizon is also likely to gain from the niche customer base of upLynk that includes The Walt Disney Company (DIS - Analyst Report).
 
Moreover, Verizon is consistently collaborating with media and cable companies to foster market share gains in different service categories as well as enter new sectors without seeking merger and acquisition strategies. The company has tied up with Cox Communications to offer bundled service packages consisting of video, phone and Internet in Phoenix and Las Vegas.

The telecom carrier has also extended its multi-year agreement with National Football League (NFL) for content delivery. The renewed agreement is expected to extend ties between the two entities through the inclusion of live afternoon coverage of games aired by CBS Corp. (CBS - Analyst Report) and Fox Sports on Sunday and as well as off-season games.  

Recently, the company has also entered into a long-term contract with Turner Broadcasting, a unit of Time Warner Cable Inc. (TWC - Analyst Report) for providing Turner’s content to FiOS TV Subscribers. The deal would provide Verizon’s FiOS TV Subscribers access to several entertainment channels including TBS, TNT and Cartoon Network, which can be watched through television, PC, tablet and mobile handsets. All these developments reflect Verizon’s increased efforts to go beyond the conventional telecom market.

Moreover, we believe that the latest acquisition coupled with organic growth in multimedia content delivery platforms will provide Verizon a significant opportunity to grow beyond the saturated and fiercely competitive U.S. wireless market.

Currently, Verizon has a Zacks Rank #3 (Hold).

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