September 22, 2017
AT&T and T-Mobile are luring in new subscribers and holding on to existing ones by offering popular television content, including “Game of Thrones” and “Stranger Things.” T-Mobile, which now has an exclusive deal with Netflix, is offering free access to the streaming video service for subscribers who buy its unlimited family plan. AT&T expanded its HBO promotion to a larger circle of subscribers. In April, it offered free HBO to its Unlimited Plus Choice subscribers, and now expanded that to anyone with an Unlimited Choice plan.
Variety reports that, although details of the deals with HBO and Netflix aren’t public, both premium channels benefit. Netflix is paid a premium price, minus a small discount, but is also growing its customer base.
“The next 100 million subscribers are far more likely to be watching content on mobile than the first 100 million,” said Netflix content chief Ted Sarandos.
HBO is enjoying similar benefits, as “part of a multifaceted deal struck between the network and the carrier in August of last year.” Benefits will increase when the merger between AT&T and HBO corporate parent Time Warner goes through. AT&T also “extended a promotion for its DirecTV Now service to its Unlimited Choice tier last week, giving qualifying subscribers access to the live-TV streaming service for as little as $10 a month,” a price that would otherwise cost at least $35.
T-Mobile chief operating officer Mike Sievert admits that offering content for free is “big and expensive and looks crazy at first.” But the goal is to prevent churn. Telcos “pay more than $300 for every customer they acquire,” so “customers who stay longer are a lot more profitable than those who jump to the competition at the next best chance.”
T-Mobile chief financial officer Braxton Carter says that offering HBO or Netflix “makes the jump that much harder.”
Verizon chief executive Lowell McAdam doesn’t believe, however, that his company needs to own content to compete, but even he “recently suggested he may opt to use … video content acquired in its buy-up of Yahoo and AOL [as] an answer to AT&T’s and T-Mobile’s initiatives.” Similarly, Sprint, which acquired a one-third stake in Tidal (for a reported $200 million), now offers its customers six months of free music streaming with the service, and AT&T Entertainment Group senior VP Vince Torres reports he is still looking for more content.
“It really is a response to what consumers want,” said Torres. “They want the premium video content to go with it.”