If anyone is happier than unscripted TV fans with the introduction of the new streaming service Discovery+ this week, it’s promotional partner Verizon. “It’s a win-win, and it’s working really, really well,” said Verizon EVP and Verizon Consumer CEO Ronan Dunne Tuesday at Citi’s 2021 Global TMT West Virtual Conference.
Dunne explained how the telecom company’s recent deals with both Discovery and Disney are luring new customers and fostered loyalty among its existing customer base, underscoring the importance of the recent telecom-streaming bundle surge.
These increasingly common partnerships with streaming apps are particularly important to wireless companies, who rely on recurring revenue from monthly bill payers. Consumers are fickle, which is why constant promotions are necessary to keep them from jumping ship.
With the rapid pace of cord-cutting, telecom giants have had to lean in on their wireless and high-speed internet businesses and get more creative to keep their customers happy. When you look at the numbers, the partnerships with streaming services give telecom companies a burst of subscriptions.
The trend of telcos bundling video apps with their wireless plans began with T-Mobile’s “Netflix on Us” promotion to some of its unlimited-plan customers in late 2017. In November 2018, Verizon began offering 12 months of Disney+ for free to some customers; the telecom giant announced an expansion of that partnership last month. Customers of Verizon’s two most expensive unlimited plans would be able to continue getting Disney+ for free, and the promotion would also include Hulu and ESPN+.
AT&T began offering its own streaming service HBO Max free to select customers in May of last year, and Comcast gave its Xfinity customers ad-free Peacock Premium for no additional cost. Most recently, Verizon announced that it would be offering newly launched Discovery+ free for one year to select unlimited-plan customers.
As a result of “Netflix on Us,” T-Mobile’s postpaid phone customer additions jumped from 595,000 in Q3 to 891,000 in Q4 in 2017. The company said the strong growth was “driven by the continued strong customer response to our Un-carrier initiatives and promotional activities,” according to T-Mobile’s earnings release. “Customers are loving Un-carrier benefits such as Netflix on Us.”
Since then, T-Mobile’s postpaid phone subscriber figures have remained elevated, except for Q1 and Q2 of last year.
Meanwhile, Verizon also saw a meaningful surge in its postpaid wireless customer additions following the launch of its Disney+ promotion. The telecom behemoth saw its postpaid wireless customer additions jump from 444,000 in Q3 of 2019 to 790,000 in Q4.
Verizon CEO Hans Vestberg said on the company’s earnings conference call Jan. 30, 2020, “We also added in a lot of partnership, as we now have network as a service as a strategy. We added in the Apple Music, and more lately, of course, we included with Disney+. Both of them has been a win-win for both our partners, for our customers and for Verizon. And this is the strategy we want to have going forward.”
AT&T may be offering its own streaming service HBO Max for free to select customers, but it appears to have been a worthwhile move for the company. In the first full quarter following HBO Max’s launch, AT&T added 645,000 net new phone subscribers in Q3 2020, up from a loss of 151,000 in the prior quarter.
“As mentioned, postpaid phone adds were strong. A big factor was postpaid phone churn of 0.69%, our best ever,” AT&T CFO John Stephens said on the company’s earnings conference call Oct. 22. “Improved postpaid churn was driven by the strength of our network and straightforward pricing plans, including our premium unlimited plan, which includes bundling HBO Max.”
Comcast didn’t give its wireless users Peacock Premium free, which is why it’s not included in the chart above, but it did offer it to some high-speed internet users. Guess what happened in the quarter following the promotion. Comcast added a record 633,000 high-speed internet customers and 556,000 total net new customer relationships.
“Our integrated strategy is also driving results in streaming with nearly 22 million sign-ups for Peacock to date, and we are exceeding our expectations on all engagement metrics in only a few months,” Comcast CEO Brian Roberts said in the company’s earnings release.
It’s worth mentioning that Verizon and T-Mobile also had deals in place with streaming service Quibi. While a deal with the mobile streaming service didn’t exactly pan out, it speaks to the intrinsic value for both sides to come together in a promotional partnership. Unfortunately, tapping Verizon and T-Mobile’s large customer base wasn’t enough to keep Quibi alive, and given its demise after six short months, it is unlikely that Quibi made a sizable dent in either T-Mobile or Verizon’s wireless businesses.
With rapidly changing consumer taste and the constant evolution of media, the telco giants have seemingly figured out a successful recipe to cash in on the streaming hype. The shift in strategy further stresses the notion that traditional media and traditional media bundles as we knew them are things of the past. More video services will inevitably join the fray, and thus we’ll likely see even more telecom-streaming partnerships hit the market.