T-Mobile last week introduced its latest promotion aimed at attracting subscribers from rival mobile phone carriers: 12 months of Hulu streaming service for Verizon customers who switch to T-Mobile.
The promotion, which the company called the fourth gift in its series of holiday surprises, follows previous attempts to lure customers. Last month it offered Simple Choice subscribers three months of Unlimited LTE, then it offered Sprint subscribers US$200 to switch. The most recent promotion gave AT&T customers who switched a phone memory upgrade and half off accessories.
In addition to a year’s worth of Hulu service, T-Mobile will give Verizon customers who switch up to $125 off in-store accessories such as smartwatches, speakers, fitness trackers and headphones.
“Verizon customers put up with a lot of sneaky tricks from Big Red these days: overpriced data, shocking overage penalties and no early upgrade option — just to name a few,” T-Mobile CEO John Legere said.
“We are going to show their customers why the Un-carrier is better with a real gift: half-off the best accessories and a full year of Hulu that comes with unlimited LTE streaming with Binge On at T-Mobile,” he added.
The promotion is directed at mobile viewing, and while it specifically called out viewing habits on Hulu, it could be seen as a countermove aimed at addressing Verizon’s recently launched video service.
“Hulu is very much responding to go90,” said Joel Espelien, senior analyst atThe Diffusion Group. “That service is Hulu-esque, and its content is meant to appeal to the millennial audience.”
While go90 is available across all the carriers, it is seen as a Verizon service, which is something T-Mobile may understand, he told the E-Commerce Times.
Video could help lure in that youth market, but T-Mobile’s connection to Hulu also could help as other carriers launch services or leverage their video options. Both AT&T and Verizon are already in the pay-TV business.
“It is not that T-Mobile is thinking it has to have a video bundle, but T-Mobile doesn’t want to be left out without one,” said Espelien.
“They are in a position where they have to bundle a third-party service as a way to level the playing field,” he suggested.
While the promotion may be in part about ensuring that T-Mobile has similar offerings to its rivals, it’s primarily about enticing Verizon customers to make the switch.
“Ultimately, any of these promotions boil down to trying to get customers,” said Abel Nevarez, analyst in the mobile group at IHS Technology.
“Verizon customers have the network on their side, so T-Mobile is looking to attract customers with other options, including its music service,” he told the E-Commerce Times.
“This is a play for younger customers, and so far these promotions have been good for attracting customers, so they work on some level,” Nevarez added. “These aren’t just gimmicks, as we are seeing that they are resonating with customers.”
The video service could be a good option because it’s established enough that people know it yet might not subscribe to it.
“Hulu is something that most millennials may have heard of, so this is pretty clever because something with lower brand awareness might not have been known, and Netflix is something they’re already using,” said Espelien.
It could take promotions like this to get anyone to seriously consider changing carriers.
“Churn is really, really low in the U.S. wireless industry, which is also saturated, so this is why you do see this sort of pouching going on,” added Espelien.
T-Mobile noted that this is the fourth promotion in its Un-carrier Unwrapped surprises, but compared to the others it may be more of a stocking stuffer.
“We have to look at the offer in combination with the various accessories that it is offering,” said Roger Entner, principal analyst at Recon Analytics.
“T-Mobile has basically offered a $200 discount to Sprint subscribers, but this is a free year of a service that customers might not want, so that feels pretty Grinch-like,” he told the E-Commerce Times.
“To get the full advantage of the offering if you are a Verizon customer, you have to buy something on top of it,” he added. “It is certainly less generous than the offers they had before.”
About the Networks
T-Mobile needs to offer such promotions because Verizon offers better nationwide coverage, according to Entner.
“T-Mobile is expanding its network, and they are working really hard,” he said.
“If you are in Manhattan or Boston, as well as most cities, T-Mobile isn’t really that different, but the moment you go out further, Verizon and AT&T hold up much better,” Entner added. “T-Mobile knows that coverage remains the sore point, so they’re addressing it where they can, and in the meantime they’ll offer you goodies.”