Streaming TV companies are giving away access to their programming through deals with third-party companies as a way of increasing their subscriber base.
Bulletpoint news website Axios published a report on Tuesday that said the tactic used by up-and-coming streaming services like Apple TV Plus, Disney Plus and Quibi mirror strategies used by traditional pay TV companies until very recently.
For decades, cable and satellite TV companies like Dish Network, AT&T-owned DirecTV and Comcast lured subscribers in by offering premium movie channels or sports packages, including HBO, Showtime and NFL Sunday Ticket, usually for a period of one to two years with a contractual commitment to the service. In recent years, both Dish and DirecTV started offering those premium networks and sports options for a smaller period of time — three to six months — with a warning in the fine print to customers that the packages would continue at regular rates unless a subscriber called to cancel before the free period was up.
Streaming companies have for years harnessed the first part of that strategy, with T-Mobile, MetroPCS and Sprint partnering with Netflix, Amazon and Hulu to offer video subscription services to cellphone customers as a incentive to draw new business away from competitors and keep existing customers locked into their service.
The key difference is, while telecoms companies initially sought out partnership with streaming services for customer attraction and retention, now it’s the streaming services seeking to forge partnerships with third parties to help establish and maintain a subscriber base.
Upstarts like Disney Plus and Quibi have forged partnerships (in the case of Disney Plus, with Verizon; Quibi with T-Mobile) to offer content to phone customers for free. Neither service has launched to the public, and it’s clear the partnerships are intended to help both services bolster high subscriber numbers out of the gate that the companies can use to leverage better deals with studios and content creators.
Two others, Comcast and Apple, have looked inward toward their company’s existing diverse portfolio of offerings to juice up subscription numbers. When NBC’s over-the-top service Peacock launches next year, it will be rolled into Comcast’s streaming service Flex automatically, making it instantly available to Comcast’s Xfinity Internet and TV customers. When Apple TV Plus launches next month, it will be available to anyone who has purchased certain Apple hardware capable of receiving the service — including iPads, iPhones and some iPods — free for 12 months.
Though nothing formal has been announced, it is expected AT&T’s forthcoming streaming service HBO Max will be offered to AT&T’s Internet and phone customers at a discounted rate — or possibly for free with certain plans.
Bundling with a third-party provider has an added incentive for streaming services: If the service is offered for free or at a discounted rate, it makes it easier to project how many subscribers will still be around when a popular series ends. That’s important because research shows 10-30 percent of subscribers are more likely to drop a service when a show they want to watch is finished; earlier this year, an Axios/Harris poll showed 18 percent of HBO subscribers were planning to ditch the network when “Game of Thrones” concluded.
It’s also tough to keep customers hooked on to a streaming service: A survey found between one-third and one-half of customers continue a paid subscription to a streaming TV service for six months or less. That trend skews higher when a service announces a rate increase, as Netflix has done more than once.
But if a third party is willing to foot the bill, streaming services figure viewers will keep coming.
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