UK telco BT is to partner subscription video-on-demand service Netflix to deliver the popular service directly to TV. BT revealed the plan alongside its first half results, in which the company announced growth of 38,000 television subscribers, bringing its subscriber base to 1.04 million; and £10 million growth in combined TV/broadband revenues. Netflix has experienced solid growth year-on-year since its launch in the UK in 2012; growing in revenue by more than 48% between 2012 and 2013 growing from £54 million in the UK to £111 million, this means that revenue growth in the UK is twice that seen in the US however still remains significantly lower than the end of year 2013 revenue figure of £1.8 billion ($2.9 billion). The move by BT follows similar deals being struck by IPTV providers in France with Netflix, which has partnered three of the four major IPTV providers: Bouygues, SFR and Orange.
BT has been investing heavily in developing its television offering since the entrance of BSkyB into the broadband market, BSkyB’s bundled packages of Premium Pay for Television, Broadband and Telephone has brought its overall share of Residential Broadband subscribers to 22.3% of the total market, a close second to BT who maintain 29.4%. BT’s move into Television was a defensive one spurred on by the rise of Sky and other ISPs. Customers joining Netflix via BT’s YouView box will be able to access the service direct from their televisions and will have the added convenience of being charged for both services on a single bill. The BT/Netflix deal has been made possible as part of a wider agreement between Netflix and YouView; although BT is the first company to announce availability of Netflix via the agreement, ISP TalkTalk is also a part owner of the platform and uses it as part of its own TV Entertainment package; and although the majority of users are via these ISP’s YouView set-top-boxes are also available for purchase direct at an RRP of £139.97.
BT’s Headline Entertainment offering BT sport is a offered as part of all of its Television packages, as well as being available as a Pay TV add-on on Sky, Virgin and Freeview. The service which is positioned as a direct competitor to BSkyB’s own Sky Sports service recently acquired the rights to air the entirety of the UEFA Champions League and Europa League for a 3 year period from 2015 at £879 million; alongside the MotoGP and Aviva Rugby League. BT has made the service available to as an additional premium channel to support this investment pricing the service at £15 pcm as a stand alone addition to customers standard package, against the aproximate £24.50 additonal charge for Sky Sports.
However the investment in content has not been mirrored in BT’s general entertainment packages. IHS research has shown that BT’s offering of television box sets has remained significantly lower than competitor services throughout 2014. In August BT offered 36 complete Box Sets, excluding catch-up television, compared with 315 on Sky and 329 on Amazon; while there movie catalogue included 381 titles against Amazon’s 1064 titles. Netflix consistently offers a significantly larger range of box set titles (318 in August) including a strong catalogue of British programming alongside popular US shows. The addition of Netflix to the BT set-top-box expands the number of film and TV titles available to BT customers; without the need for BT to divert investment away from its sports channels; while Netflix benefits from the removal of barriers to access by having access to a platform which is already connected to over 1.7 million primary screens in the UK.
Update, 4th November 2014 - Following BT revealing its plans to stream Netflix via its own YouView set-top-box a wider announcement has been made today confirming that the service will also be available on TalkTalk and retail set-top-boxes in early 2015.