Verizon and T-Mobile are building digital bundles that AT&T has not matched

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With consumers dealing with a deluge of streaming video services, an obvious solution is rebunding. We still don’t know which company will be the first to offer a range of subscription products at a discounted price – similar to traditional pay TV.

The answer is an important one. The content aggregator is the direct selling point of the user – which comes with the benefit of consumption data. That is the ideal position in the digital age, in which advertisers follow the spending pattern.

Unlike cable television, a digital service bundle need not be limited to television alone. This gives an aggregator the ability to personalize offers like never before, mixing and matching television, news, e-commerce, gaming, health, and any other service that charges a monthly or annual subscription fee.

The obvious “aggregator 2.0” candidates are the streaming hardware technology companies (Apple, Amazon, Roku) or the cable companies (Comcast, Charter, Altice USA) that traditionally have bundled content. It’s also possible that media companies, such as Disney, could embrace bundling by including other programs in their streaming ecosystems.

But now a few US wireless companies are starting with an early lead: Verizon and T-Mobile.

Over the past year, Verizon and T-Mobile have systematically added subscription services to wireless plans. Sometimes the offers are promotions with a shelf life of three, six or twelve months. Other times, the subscription offers have no expiration dates.

These bundles are not as simple as pay TV packages, where consumers pay a certain price for a certain amount of programs. Instead, Verizon and T-Mobile have offered a group of monthly digital subscription services, from video to gaming to telehealth, coupled with wireless service plans.

For consumers, the benefit is clear: bundles save money.

For content producers, wireless companies provide nationwide marketing reach to boost subscribers. This is especially important for media companies, which are increasingly valued by Wall Street for their number of streaming subscribers.

For the wireless carriers, adding exclusive plans to bundles is a key differentiator between Verizon, AT&T and T-Mobile, which offer similar wireless services in many regions of the country. The plans reduce churn and encourage the use of their wireless networks – and possibly 5G home broadband, which is still in the early stages of national rollout.

“Adding more personalized plans is a big part of our strategy,” said Frank Boulben, Verizon’s chief revenue officer at the consumer group. “It fits into our broader mix and match offering.”

Wireless bundles

As part of Unlimited Data Packs from Verizon, $35 per month (plus taxes and fees) gives customers six months of Disney+, Apple Music, and Discovery+ free.

Increase to $45 per month, and Verizon offers Disney+, Hulu, and ESPN+ as part of the package as long as customers stay with the wireless company, along with 12 months of Discovery+. For $60 a month, Apple Music is included indefinitely. For 5G customers with select unlimited plans, including Verizon offered 12 months from PlayStation Plus and PlayStation Now late last year.

Verizon plans to announce an additional subscription next week, according to people familiar with the matter. A Verizon representative declined to comment on the details of the promotion.

T-Mobile has countered this with a growing bundle of its own services for unlimited data customers, including free Netflix and free MLB TV. Postpaid wireless subscribers get a 12 month offer formonth $10 off per month on YouTube TV (usually $65 per month) and streaming TV service Philo, usually $20 a month.

Since early last year, T-Mobile has had various subscription promotions at various times, with wireless subscribers getting a free one-year subscription to the sports journalism site The Athletic, three months of free delivery on Postmate orders, a six-month membership to MyTelemedicine, and a $1-month membership as a Gold Tinder subscriber. T-Mobile has also been giving customers an hour of free Wi-Fi and unlimited texting on flights that use GoGo Wi-Fi for several years now. Verizon is also considering other monthly plans to further drill down into tailored offerings, including potential retail and telehealth offerings, Boulben said.

“People are streaming more video on smartphones than anything else,” said Jon Freier, T-Mobile executive vice president, Consumer Markets. “We’ve looked beyond video to add more value to the mobile experience, with free and discounted music, gaming, in-flight Wi-Fi and even telemedicine. Our focus is on providing the best deals from the best partners to customers to get the best mobile experience.”

WarnerMedia Albatross

AT&T spent more than $100 billion (in debt) on WarnerMedia in 2018 because it hoped it could offer its wireless subscribers unique content offerings through owning the asset.

But those bundled offers never really materialized. AT&T simply offered its unlimited wireless subscribers free HBO Max. That’s basically what Verizon and T-Mobile did with Disney and Netflix, respectively. The only difference was that AT&T paid $100 billion for the privilege.

WarnerMedia has arguably prevented AT&T from being more aggressive with its content promotions. Verizon has added a second streaming service, Discovery+, to its unlimited plans. In fact, if AT&T had offered a second discounted streaming service, it would have competed against itself, as AT&T would promote a video service that would grab the attention of HBO Max — the video service it owned.

AT&T’s only added digital subscription service for wireless customers is HBO Max, a spokesperson confirmed.

These dynamics eventually forced AT&T Chief Executive John Stankey to separate and merge WarnerMedia with Discovery, a decision announced earlier this week. Stankey said at a news conference Monday that he expects to continue a partnership with WarnerMedia, which will be led by Discovery CEO David Zaslav, similar to Verizon’s partnerships with Disney and T-Mobile with Netflix.

“Through a partnership, David and I plan to continue working together to ensure HBO Max is part of the AT&T portfolio,” said Stankey. “We kind of get the best of both worlds.”

This echoes the sentiment of Verizon CEO Hans Vestberg, who told CNBC last year that he saw no need to buy a media company because he could offer bundles through partnership.

“We can work with Disney, like we did with Disney+, we can cooperate with Apple on exclusively on Apple Music, and still get the same kind of offer for customers, but with a completely different model [than AT&T]Vestberg said.

Venture capitalist Marc Andreesen has credited his former boss, ex-Netscape CEO Jim Barksdale, saying, “There are only two ways to make money in business: one is bundling; the other is unbundling.”

The biggest media story of the past two years has been the systematic unbundling of pay-TV.

That means it’s time to bundle again.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

WATCH: CNBC’s full interview with Discovery CEO David Zaslav and AT&T CEO John Stankey

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