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Pay-TV Deals Paying Off for Netflix

11 Oct, 2015 By: Erik Gruenwedel

Netflix’s scant direct-access agreements with pay-TV operators took a significant step forward this past December when it inked a deal with Dish Network — the subscription streaming pioneer’s first with a major domestic player.

That pact, which allows Dish subscribers to access Netflix without linking externally through a website or app, has helped the SVOD service generate an estimated 200,000 new subscribers, according to Wedbush Securities analyst Michal Pachter.

Netflix entered into similar direct-access deals internationally, notably with Vodafone, Talk Talk Group, France’s Orange, and Swedish cabler Com Hem, among others. Pachter contends Netflix could add similar numbers of new subs from each of these international agreements.

Last October, British Telecommunications (BT) began bundling Netflix, along with other services via YouView boxes. Netflix in 2013 inked the first U.K. access agreement with Virgin Media.

“We expect 2 million and 2.5 million domestic and international streaming sub net [third-quarter] adds, respectively, compared to 1.9 million and 2.43 million last year, with Netflix benefiting from seasonality, the Japan launch, and launches in Italy, Portugal, and Spain,” Pachter wrote in an Oct. 9 note regarding the SVOD service’s Q3 financial release Oct. 14.

Long advocated by Netflix founder Reed Hastings as a conduit linking the pay-TV ecosystem with over-the-top video, the strategy continues to be rebuffed by Comcast, AT&T and Time Warner Cable, which view the SVOD service as a threat.

Netflix’s first domestic direct-access deals included Atlantic Broadband, Grande Communications and RCN. Regardless, the trend among domestic pay-TV operators embracing SVOD continues.

Cablevision in April made HBO’s subscription streaming service — HBO Now — available to its broadband Optimum Online subscribers. And the cabler became the first domestic multichannel video program distributor to offer direct access to Hulu Plus, enabling subscribers to pay for the service through the monthly cable bill — a perk not even Netflix offers.

In May, Hulu Plus signed an agreement with Suddenlink enabling the latter's St. Louis-based 1.1 million TV subscribers direct access to Hulu on their TiVo set-top boxes.


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