T-Mobile is launching a free one-year giveaway of Quibi to some wireless customers — a promo that could plant the seeds for Jeffrey Katzenberg’s ambitious mobile TV startup to build a sustainable viewer base.

But while Quibi’s exclusive distribution pact with T-Mobile gives it a valuable opportunity to win loyal fans, it’s no guarantee of the streamer’s long-term success. After one year, T-Mobile subscribers who are eligible for the offer will be forced to choose between continuing to get one free Quibi account — or, instead, get Netflix bundled for free.

T-Mobile’s bundling deal with Quibi is modeled on the carrier’s Netflix-for-free offer, launched in 2017. Note that the Quibi and Netflix “on us” offers are available only with T-Mobile’s unlimited family plans. For the U.S.’s No. 3 wireless provider — which just closed its merger with Sprint — the streaming video partnerships are carrots designed to drive consumers to multiline plans.

Originally, for Quibi’s April 6 debut, T-Mobile planned to intro Quibi as a second video-streaming choice alongside Netflix. But T-Mobile changed up the strategy less than a week before the Quibi launch.

Related: Jeffrey Katzenberg’s Quibi Is Ready to Launch, but Will Viewers Bite?

“This was us at T-Mobile deciding to – especially now – deliver more outstanding content to our customers,” said Sarah Osmer, VP of customer management. “The Quibi team was more than happy to participate.” Amid the coronavirus crisis, she added, “people right now, inside their homes, are looking for content and entertainment.”

The COVID-19 outbreak may have been the overriding factor for T-Mobile’s decision to offer the ad-supported version of Quibi (regularly $4.99 per month) free for one year. But the carrier might also have been concerned that Quibi — as a brand-new, unknown brand — wouldn’t be something users opted for, if forced to choose between Netflix and Quibi right away. In addition, Quibi is opening its doors with a free 90-day trial anyway, hoping that by the summer more Americans will be willing to open their wallets.

As with its pact with Netflix, T-Mobile will be paying Quibi a per-subscriber fee. Terms of those arrangements haven’t been disclosed, but T-Mobile exec have said they’re paying a reduced wholesale rate for the “Netflix on Us” program. It has likely also agreed to pay Quibi less than the $4.99/month retail rate.

Disney, for its U.S. launch last fall of Disney Plus, struck a similar deal with Verizon to offer the subscription VOD package free for 12 months. But Verizon’s Disney Plus offer has been available to all unlimited wireless customers as well as new Fios broadband subscribers, which is far more expansive than T-Mobile’s Quibi and Netflix deals.

Quibi is set to go live with some 50 original shows and movies, with content from stars including Reese Witherspoon, Jennifer Lopez, Chrissy Teigen, Chance the Rapper, Liam Hemsworth, Sophie Turner and Lena Waithe.

T-Mobile says Quibi, with its episodic shows and movies delivered in sub-10-minute segments, is a fantastic fit. According to Osmer, mobile video comprises 51% of the carrier’s network bandwidth consumption and of that, 85% is short-form content (from apps including Instagram, TikTok, YouTube and Facebook).

“With more of us staying home right now, Quibi’s never been more needed,” Mike Sievert, newly installed as T-Mobile’s CEO after John Legere stepped down as chief exec yesterday, said in a prepared statement. “It comes on the scene with a totally different experience, made for mobile, quick to watch and as entertaining as anything you’ve ever seen.”

Quibi CEO Meg Whitman, in a statement, said, “With the only nationwide 5G network, T-Mobile was the obvious choice for our customers.” But realistically, Quibi’s options were limited. AT&T’s mobile content play is engineered around WarnerMedia, set to debut the HBO Max streaming service in May. Meanwhile, Sprint was on its way out with the T-Mobile merger, and Verizon teamed up with Disney Plus.

Quibi CEO Meg Whitman (left) and T-Mobile CEO Mike Sievert at Quibi’s 2020 CES press conference.
Credit: Etienne Laurent/EPA-EFE/Shutterstock

T-Mobile’s 12-months-free Quibi offer is available to customers on Magenta and One plans with two or more voice lines. The deal includes single-stream access to Quibi’s service included in their plan no added cost for a full year. Eligible customers can sign up between April 6 and July 7 to get Quibi added to their plan (online at mytmobile.com or in the T-Mobile app). The offer also is open to T-Mobile’s discounted First Responder, Military and Magenta Plus 55 plans and small business customers with up to 12 lines.

In addition, through April 3, T-Mobile customers who sign up in the T-Mobile Tuesdays loyalty-rewards app for Quibi will get three bonus episodes of Jennifer Lopez’s unscripted money-giveaway series “Thanks a Million” when it launches on April 6, for a total of six episodes right away.

Related: Quibi Lineup: All the Shows and Movies on Mobile Streaming Service at Launch

Like all video delivered on T-Mobile’s network, Quibi video streams will be delivered in standard-definition (480p) format. The app will be available for iOS and Android devices.

Again, while T-Mobile’s free giveaway of Quibi to certain subs will only boost Quibi’s visibility, there are restrictions on the offer. The deal is available to family-plan customers with multiple lines — but that will include only one Quibi account, available on one device at a time.

There’s also the question of how many T-Mobile customers will actually opt for the Quibi offer. T-Mobile reported 86 million customers overall at the end of 2019. Not all of them take the multi-line postpaid plans that are eligible for free Netflix and Quibi access.

According to T-Mobile’s financial filings, the “Netflix on Us” offer reduced branded postpaid phone average revenue per unit (ARPU) by 54 cents on a monthly basis in 2019. T-Mobile had 38.6 million average monthly postpaid phone customers last year, indicating the carrier paid Netflix around $20.8 million per month in 2019.

Depending on the wholesale rate T-Mobile is paying to Netflix, that means somewhere between 2 million and 5 million of the carrier’s customers have opted for the free Netflix deal. Whether millions of T-Mobile customers will go for the free Quibi is unknown, but in any case after the 12-month period they’ll have to choose either Netflix or Quibi as their bundled streaming perk.

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