Netflix share price up, inks first major US deal

December 18, 2014 4:01 pm

Netflix Inc reported on Wednesday that it struck an agreement with Dish Network Corp. to implement its application into the satellite provider’s latest set-top units as a part of its expansion to US pay-TV.

This is the first deal that the streaming video service inks with a big US pay-TV provider, enabling Netflix to reach Dish’s 14 million customer base. However, the Netfix application will be only available to customers who have Dish’s second-generation Hopper device, which was released in February 2013. The satellite provider did not say how many of its consumers have those recorders.

Under the deal, current Dish customers would have to subscribe to Netflix on their own as the companies will not offer a bundled subscription. They won’t change the Netflix interface for Dish’s customers, also the application would easily accessible, the companies said.

“This app integration eliminates the need to switch television inputs to access content on varying devices. It gives our customers easy access to their favorite shows and movies, on both DISH and Netflix, without ever having to leave their Hopper,” said Vivek Khemka, DISH senior vice president of product management.

While Netflix has reached similar agreements with overseas companies, it has been struggling for more than a year to strike a major deal at home. Partly because major players feel reluctant to the risk of losing premium and on-demand revenues by allowing customers easy access to Netflix’s vast video content.

The dispute between the video stream service and Comcast Corp, the largest cable company, also played its part in denying Netflix any major contracts. In August Netflix formally objected to the Comcast and Time Warner Cable, the second-biggest cable provider, merger.

However, Netflix was able to reach deals with smaller US companies like Suddenlink Communications and Atlantic Broadband, the nation’s 9th and 13th biggest cable providers.

Netflix has previously said that it will be targeting partnerships with pay-TV companies in 2015, as they would allow customers to easily switch from traditional television to online streaming content. Last quarter Netflix reported a decrease in customer growth, however, it still has more than 53 million subscribers across nearly 50 countries.

“As the first major pay-TV provider in the U.S. to add the Netflix app to its set-top box, DISH strengthens an already robust video entertainment experience for its customers,” said Bill Holmes, global head of business development at Netflix.

Netflix gained 5.44% on Wednesday and an additional 1.29% on Thursday to trade at $337.34 at 15:33 GMT on the NASDAQ, marking a one-year decrease of 10.34%. The company is valued at $20.10 billion. According to the Financial Times, the 37 analysts offering 12-month price targets for Netflix have a median target of $415.00, with a high estimate of $600.00 and a low estimate of $245.00. The median estimate represents a 24.38% increase from the last price close of $333.65.

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