(Reuters) – T-Mobile US Inc (TMUS.O) said on Wednesday it will offer a free subscription to video streaming service Netflix Inc (NFLX.O) with its unlimited data family plans in a push to lure more subscribers in a highly competitive U.S. wireless market.
Customers with T-Mobile One plans who have two or more lines can now 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, T-Mobile said. The plans are priced at $40 per line for a family of four.
The new offer shows how wireless carriers are bundling content with mobile service as a way to draw customers in a saturated market where most people already have cell phones.
Earlier this year, AT&T Inc (T.N), which is buying Time Warner Inc (TWX.N) for $85.4 billion in an effort to turn itself into a media powerhouse, started including HBO with its Unlimited Plus wireless plan. Such offers are helping the company both win and retain subscribers, Chief Financial Officer John Stephens said on a post-earnings conference call with analysts in July.
T-Mobile, the No. 3 U.S. wireless carrier by subscribers, has been taking share from larger rivals AT&T and Verizon Communications Inc (VZ.N) 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.
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.
“We make a big, bold risky investment in solving a customer pain point,” he said, adding that “if we run our business right, that generates profit growth and cash flow growth.”
Shares of Verizon were off 0.5 percent at $47.12 in midday trading. T-Mobile was down 0.3 percent at $63.44 and Netflix was up 0.8 percent at $175.94.
Reporting by Aishwarya Venugopal in Bengaluru and Anjali Athavaley in New York; Editing by Shounak Dasgupta and David Gregorio