As Amazon nips at its heels, operator deals become crucial for Netflix’s global growth

By Jim O'Neill on Dec 15 2016 at 7:00 AM
As Amazon nips at its heels, operator deals become crucial for Netflix’s global growth

Netflix is now available to Liberty Global customers in a pair of European countries, part of its deal with the international cableco that will give it direct access to millions of potential subscribers and help Liberty Global reduce churn and cord cutting, while also potentially attracting younger consumers to its larger service. The move is crucial to Netflix’s continued growth outside the United States as it now faces stiff competition globally from Amazon Prime Video.

The deal enables customers using Virgin Media’s Horizon TV service in Ireland to watch Netflix content seamlessly via its app on a pair of channels at no extra cost (aside from the Netflix subscription fee), eliminating the need to switch back and forth between inputs, a barrier that has kept some consumers from signing on with the streamer.

“Netflix is even better when you can watch it seamlessly on Virgin Media’s Horizon TV service or you can watch it on any device anytime, anywhere you can get online,” Paul Farrell, VP at Virgin Media said. Virgin Media has consistently been ranked as the top network to watch Netflix on in Ireland.

“Our customers recognize that great entertainment needs the fastest broadband and we’re constantly improving the connected entertainment experience for them in their homes,” added Farrell.

Along with Virgin Media, Liberty Global’s UPC in Switzerland also is jumping on board the Netflix train, again using an app through the Horizon box.

It’s currently the only operator in Switzerland to offer access to Netflix on its set-top box.

Ireland and Switzerland are among the first countries to introduce Netflix to customers as part of Liberty Global’s multi-year deal with Netflix that was announced in September. It will lead to the roll out of the app to customers in more than 30 countries around the world and follows the successful U.K. launch of Netflix on Virgin Media in 2013 and the most recent launch – last week – of Netflix at Liberty Global’s Ziggo cable platform in the Netherlands.

The rollout will advance to other countries as technological upgrades across all of Liberty Global’s operations continue through 2017.

In the September announcement, Liberty Global CEO Mike Fries noted that the deal “will provide even more freedom to our subscribers – allowing them to access a goldmine of amazing TV and films at the click of a button, fully integrated into their usual TV viewing set-up.”

That’s a major step toward Netflix truly becoming the global Internet TV network that CEO Reed Hastings has envisioned.

Liberty Global plans to offer customers the first month of Netflix for free when customers sign up for a Netflix account for the first time.

Netflix has seen slowing growth in the United States as the service has seen substantial penetration among existing pay-TV households. At the end of the third quarter, Netflix had 86.74 million subscribers, 47.5 million in the United States and 39.24 million spread across the rest of the world.

It’s increasingly relying on the growth of its international business to fuel the massive content spend it’s undertaken for both licensing existing content and for creating originals.

With Amazon this week announcing that it, too, was launching on a global scale, Netflix will push for more deals with operators. Those deals not only increasing its access to millions of pay-TV audiences, but also to a potential customer base that already is used to paying for premium channels like HBO. After all, as Chief Content Officer Ted Sarandos told GQ magazine in 2016: "The goal is to become HBO faster than HBO can become us."

Stay tuned.

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