T-Mobile sees an opportunity in Netflix price hike

Netflix
T-Mobile covers the cost of Netflix subscriptions.

Netflix said this week that it plans to increase prices in the U.S. next month, sending the company’s stock skyrocketing (investors do love profits) and consumers grumbling. Sensing its own opportunity in the controversy, T-Mobile said that its Netflix On Us feature will continue to cover subscription costs even after the price hike.

The streaming giant said that it will raise the prices of its standard plan from $9.99 per month to $10.99, while the premium plan will increase from $11.99 per month to $13.99. The basic plan for single-screen streaming will stay at $7.99 per month.

The move makes sense given increased competition in the over-the-top (OTT) space—and original content, hardly a cheap endeavor, has become the main competitive chip between Amazon Prime, Hulu, Netflix and the rest.

Investors have raised big questions about Netflix’ margins lately after the company said in its summer earnings call that it planned to spend $6 billion on content development this year alone (and $15 billion over the next few years).

Hence, price increases were in some ways inevitable.

T-Mobile CEO John Legere took to Twitter to make hay out of the situation, tweeting: “Don’t panic! @TMobile still covers your Netflix subscription with #NetflixOnUs! #winning”.

Meanwhile, the official @TMobileHelp account on Twitter laid any lingering concerns to rest with a to-the-point confirmation: “Absolutely nothing changes! T-Mobile will still cover your Netflix standard subscription with Netflix on Us.”

Netflix On Us, first launched in September, is available to customers with two or more voice lines on a T-Mobile One plan, which goes for $40 per line, up to four lines. The Netflix perk covers the cost of one standard Netflix subscription; and for those that want the Netflix premium plan, the subscriber simply pays T-Mobile for the monthly difference between the standard and premium plans.

With more and more long-form binging happening on mobile, and mobile video in general growing in triple digits, it’s clear that content is a potential battleground going forward for the U.S.’ brutal, price-driven wireless market.

“The future of mobile entertainment is not about bolting a satellite dish to the side of your house or resuscitating faded 90s dotcoms,” Legere said at the Netflix On Us launch. “The future is mobile, over-the-top and unlimited. While the carriers spend billions on their franken-strategies to cobble together carrier–cable–content mashups, the Un-carrier just leapfrogged them all by partnering with the best and giving it to customers at no extra charge. Because that’s what we always do. Give more to you without asking more from you.”