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T-Mobile and Viacom have struck a deal to bring Viacom channels including MTV, Nickelodeon, Comedy Central, Paramount Network, and BET to a new T-Mobile OTT video product that will launch sometime later this year and become available to its nearly 80 million wireless customers, per The Wall Street Journal.
Other details — including cost, distribution, and launch date — remain scant.
What it means: This is the first content deal in T-Mobile’s ongoing plan to build a competitive cable replacement product, as it looks for new customer growth from cord-cutters.
- T-Mobile has been planning an OTT TV service since late 2017, when it acquired the small cable company Layer3 TV for $325 million. Layer3 is unlike pay-TV rivals because it delivers content via internet protocol (IP) via its own private IP network, similar to how Netflix delivers content, rather than the radio frequency-based systems of most cable technology, per The Verge. That could mean that Layer3 is better positioned to deliver streaming video to consumers. The service operates in a few markets, including Washington DC and Chicago, and offers a bundle of channels for about $80 a month.
- Viacom is increasingly looking to supplement traditional carriage deals with pay-TV companies with streaming deals, such as with skinny bundles. For Viacom, the deal gives it a meaningful carriage deal at a time when its linear ratings are declining as young audiences defect from traditional television. New forms of distribution are especially vital for Viacom after it recently avoided a blackout amid a contentious carriage dispute with AT&T’s DirecTV.
The bigger picture: T-Mobile could offer the TV service for free to subscribers as a way of driving wireless customer acquisition and greater retention among existing subscribers.
In keeping with its strategy to provide customers with free entertainment content — for example, T-Mobile offers offers free Netflix and Pandora for certain subs — T-Mobile is likely try and win over and retain subs by offering Viacom's content for free, as a perk of signing up for wireless service. The strategy would also be similar in-kind to AT&T's with its recently launched skinny bundle Watch TV, which customers get for free but non-customers have to pay $15 to access.
Free content is likely to incentivize more sign ups, as well as greater loyalty: A combined 29% of consumers said free streaming to mobile video and free subscriptions are the most important mobile offerings a carrier can provide, per Business Insider Intelligence exclusive data. Further, among Verizon and AT&T wireless customers, nearly a third (31%) said that free content would convince them to switch to T-Mobile.
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