I
n the months leading up to the
November debut of Disney+,
Disney’s various entities weren’t
the only ones helping to boost
the OTT offering through major
marketing and promotional
pushes. The media and entertainment
giant found a friend in Verizon, too.
A wide-ranging partnership between
Disney and the telco, inked last summer,
offered certain Verizon customers a free
year of Disney+ if they subscribed to the
company’s unlimited wireless plans or
home internet. Former Disney CEO Bob
Iger said he was “very pleased” about the
deal during last month’s earnings call.
Verizon and Disney+’s pact isn’t the
first partnership between a telco and a
streamer, although it is almost certainly
the biggest. As the industry gets more
crowded and competitive, these partner-
ships only stand to become more common.
The reason is simple. As streamers look
for ways to accelerate subscriber growth
and as telco and tech companies look to
claw customers away from competitors,
joining forces gives both companies what
they need, at least in the short term.“You have these content companies
who are going direct-to-consumer, and
they often haven’t got the infrastructure
to market and distribute themselves
other than via their website or via an app
in an app store,” said Frank Boulben,
svp, consumer marketing and products,
Verizon Wireless. “We are a very comple-
mentary distribution partner to them ...
and it coincides with the fact that they’re
something our consumers want.”PARTNERSHIPS HELP REDUCE CHURN
AND KEEP BRANDS COMPETITIVE
Streaming services have partnered with
telcos since at least 2017, when T-Mobile
began offering free Netflix subscriptions
to customers of its unlimited family
plan. Sprint, now in the midst of merg-
ing with T-Mobile, gave its unlimited
wireless customers an ad-supported
Hulu subscription, also for no extra
charge. And last fall, T-Mobile struck a
deal with upcoming streaming service
Quibi to give its 83 million customers
access to the company’s programming
upon its April debut. (The exact terms of
that partnership haven’t been disclosed,and T-Mobile declined to comment.)
James McQuivey, vp, principal analyst,
Forrester Research, said telcos pursue
the deals to try to acquire customers who
might be swayed by the promise of free
access to a hot new subscription service.
“Telcos are always looking for anything
that will make you switch, or make you
stay after you did switch, but it is just so
hard to do that in a market that is essen-
tially undifferentiated,” McQuivey said.
Some telcos, like AT&T and Com-
cast, have their own built-in streamers
they can leverage. WarnerMedia’s HBO
Max and NBCUniversal’s Peacock will
be folded in as benefits to their parent
companies’ mobile and broadband pack-
ages. But even they may pursue deals
similar to the Disney+ and Verizon part-
nership, which NBCU chairman Steve
Burke called a “very attractive model”
at a Peacock investor event in January.
For streamers that aren’t owned by
a telco parent, partnerships offer up
swaths of new customers. They also come
with other benefits, like keeping churn in
those streaming services low if promo-
tions extend beyond a month at a time.
“Essentially Verizon says to Disney,
we’re going to make sure the customer
stays because we are going to keep
them for a year,” McQuivey said. “And
then when the year is up, we lock it into
a monthly bill and hope they forget
they’re paying for it.”
The partnerships come with initial
costs. Boulben declined to provide specific
breakdowns of its deal with Disney+, but
said it’s typical for the content partner to
fund part or all of the promotional efforts
and compensate a service provider like
Verizon for billing and customer service
for special offers. That means a dent in the
amount of revenue businesses can gener-
ate per user. And Verizon’s most recent
earnings call reflected slightly lower than
expected adjusted earnings.6
Tre n d i ng
THIS WEEK’S INSIGHTSSTREAMERS PARTNER
WITH TELCO AND TECH
THESE BRANDS OFFER A MAJOR BOOST
TO THE OTT MARKET. BY KELSEY SUTTON