T-Mobile US said on Wednesday it will offer a free subscription to video streaming service Netflix with its unlimited data family plans in a push to lure more subscribers. The new offer shows how wireless carriers are bundling content with mobile service as a way to attract and keep customers in the United States, where most people already have cell phones and are increasingly using them to stream content.
Earlier this year, AT&T, which is buying Time Warner for $85.4 billion in an effort to turn itself into a media powerhouse, started including HBO with its Unlimited Plus wireless plan. The company has said such offers are helping with subscriber retention.
T-Mobile, the No. 3 U.S. wireless carrier by subscribers, has been taking share from its larger rivals AT&T and Verizon Communications through cheaper prices and added perks. Its executives have not expressed interest in owning content but have said they are interested in partnering with media companies on delivering it. T-Mobile already allows users to stream video from Netflix without using their data.
Shares of Verizon and AT&T were down roughly 1.3 percent in afternoon trading. T-Mobile was up 0.11 percent at $63.71 and Netflix was up 2.2 percent at $178.39. "T-Mobile is in an enviable position for the future communications landscape by building the bundle from scratch, without having to sustain legacy businesses that are in structural decline," said Walter Piecyk, an analyst at BTIG, in a note. "Netflix is in a similarly enviable position, which makes them obvious and high profile partners."
The offer allows customers with T-Mobile One plans who have two or more lines to get a standard Netflix subscription, normally priced at $10 a month, for free as part of an exclusive, long-term agreement that the company struck with Netflix. The plans are priced at $40 per line for a family of four. Piecyk added that the promotion likely aims to get T-Mobile's single-line users to add a second line since subscribers to family plans are more loyal.
The company said its latest move will not affect its financial forecasts, but Mike Sievert, T-Mobile's chief operating officer, characterized the agreement with Netflix as a "big investment" during a call with reporters. "Netflix is not providing us with a giant discount," he said, adding that the move was in line of T-Mobile's strategy of betting on benefits that subscribers value.
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