How Verizon Won the Streaming Wars Through Giveaways

In August, AMC+ landed what has become every streaming service’s holy grail: a coveted Verizon partnership. As part of a deal between the two companies, certain customers of Verizon's broadband and unlimited phone plans are entitled to a free year of the AMC Networks streamer, featuring ad-free programming across its entertainment networks and early access to original shows. The giveaway offered a major marketing boost to the streaming service, which is aiming to clear 9 million subscribers by year's end. “This was an aspiration of mine and the company for a good amount of time,” said Josh Reader, AMC Networks’ president of distribution and development. “It’s a really powerful combination to be able to marry our streaming ambitions with [Verizon's] knowledge of their customers and their ability to target those customers and put in front of them the content that they want.” Phone and internet companies have long used giveaways and promotions to entice customers away from their competitors and into their ecosystems as a matter of differentiation, said Jim Nail, a principal analyst at Forrester. “Because the mobile phone business is completely commoditized and completely saturated, the game for mobile phone players is keeping all of their subscribers and not having them churn out." Free Trial Free-for-All Other wireless companies are also dabbling in the streaming giveaway game. AT&T offers free access to HBO Max's ad-free tier to qualifying AT&T TV, DirecTV and AT&T mobile customers.The AT&T-owned Cricket Wireless gives away HBO's ad-supported tier to customers on its unlimited plan.T-Mobile offers free Netflix subscriptions to qualifying family plans. Sprint, which is owned by T-Mobile, gives unlimited tier customers access to Hulu’s ad-supported offering. On the other side of the equation are new streaming businesses that want to scale up fast. Media buyers are keen on tracking monthly active users as their main metric for evaluating the efficacy of streaming video services, said Kelly Metz, Omnicom Media Group’s managing director of advanced TV activation. Streamers are more than happy to team up with providers in exchange for co-marketing and a built-in potential customer base. “The biggest benefit is exposing a new service to a different audience than what you might reach with your own marketing mix,” said Gabriel Sauerhoff, svp of digital distribution and commercial partnerships for Discovery, which teamed with Verizon earlier this year to offer up to one free year of Discovery+ to qualifying Verizon internet customers. Striking a deal with a phone or internet provider can boost user bases early on. And while there is a potential downside—these kinds of arrangements usually come via wholesale agreements that may lower average revenue-per-user—the cost savings in marketing and subscriber acquisition can make it worthwhile, Nail said. These kinds of partnerships have already proven successful. Three months into Disney+’s existence, about 20% of its then-30 million subscribers came in through a free-year giveaway with Verizon. Disney+ now has more than 100 million subscribers, and the company continues to work with Verizon to give away access to Disney+ as well as Disney streamers Hulu and ESPN+. Discovery+ hasn't shared how many subscribers it’s netted through its own Verizon partnership, but Sauerhoff said the company was “very pleased” with the results. “There is a win-win in these partnerships,” said Frank Boulben, chief revenue officer of Verizon Consumer Group. “On one side, what we want at Verizon is to answer our customer needs and to do it with different services that they cannot get from our competitors. On the programmer side, they are looking for a way to accelerate their penetration at the lowest possible cost and to partner on the billing, customer service and lifecycle management.” At Verizon, streaming partnerships have resulted in “extremely high” conversion rates; on average, Boulben said, 50%-70% of customers either upgrade their plans to include continued access to a streaming service or opt to continue paying for the service separately. While telcos continue flocking to streaming video services for customer giveaways, those kinds of partnerships may not last forever. If customer interest starts to wane, phone and internet providers may move on to other in-demand services—which may be why Verizon is already eyeing mobile game subscription offerings as yet another differentiator. “If there’s one thing you can guarantee in marketing," Nail said, "it’s that after some period of time, in a year or two, the world will move on to the next shiny thing."

Streaming & OTT

How Verizon Became New Streaming Services' Secret Weapon for Scaling

Telcos offer marketing muscle and high conversion rates in exchange for exclusive deals

Kelsey Sutton

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Kelsey Sutton