Pay-TV operators benefit from EPG-based Netflix but concerns persist


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Joseph O'Halloran

| 12 February 2016




Even though they are yet to reap clear revenue-generating opportunities, pay-TV operators offering Netflix are negating the threat of cord-cutting says research from IHS Technology.



The Netflix on Pay-TV: A Marriage of Convenience report found that the subscription video-on-demand (SVOD) platform now has partnerships in place with 25 pay-TV providers such as Virgin Media and BT TV, and reported that integrating the service has had a net positive impact on these operators’ performance. Mainly these improvements have come from positively impacting operators’ performance and complementing traditional channels and VOD offerings.

Revenue-wise operators typically receive a share of the ongoing subscription fees only for customers that sign up via that operator’s set-top box, the IHS report says. This is insignificant, it says, as most Netflix users either already have an account or sign up via a more user-friendly device, such as a PC/laptop or tablet.

Moreover, warned the analyst in the report, such partnerships are not appropriate for all, as operators investing in their own movies and entertainment content, such as Sky, typically remain wary of working with Netflix. In addition, in the long-term some of operators’ core channel packages and VOD services —including premium movie packages — could be at risk in the longer term, as growing numbers of pay-TV subscribers access Netflix.

Commented IHS Technology research director Ted Hall: “Netflix is a both less lucrative and more dangerous content partner to work with than the other premium networks pay TV providers traditionally partner with, such as HBO. But collaborating with the ever-popular streaming service is necessary for many operators positioning their platforms as one-stop-shop ecosystems for TV and video content.”

IHS also cautioned that growing Netflix usage could also prompt pay-TV customers either subscribing to or considering premium movie services to reconsider their need for these higher-cost packages. “Europe, where HBO has achieved consistent subscriber growth in recent years, will be more resilient to this than the US,” Hall said.