U.K. Cable Giant Virgin Media to Integrate Netflix Service in Industry First

DOWN: Reed Hastings

Less than a year ago, the Netflix chief's stock was at $285 a share. On July 30, it closed at just $57.75 thanks to slowing domestic growth and the high cost of expanding overseas.

The deal will bring the streaming service onto a pay TV platform for the first time and could open the door for similar arrangements with other operators.

LONDON – U.K. cable giant Virgin Media will integrate Netflix’s streaming subscription VOD service into its pay TV offerings in an industry first.

Netflix, led by CEO Reed Hastings, said the move will bring its service onto a major pay TV platform for the first time. Some analysts have suggested in the past that pay TV operators around the world could start partnering with and integrating so-called "over-the-top" broadband services like Netflix over time instead of competing with them.

The move could also broaden Netflix's U.K. reach. The company hasn't disclosed how many U.K. subscribers it has since breaking the 1 million mark last year, but a recent analyst estimate put its reach at around 1.5 million users.

Virgin Media, owned by John Malone's Liberty Global, said its subscribers will be able to access a Netflix app via Virgin Media TiVo set-top boxes. That means Netflix will be available to 1.7 million Virgin Media TiVo homes this year, starting with a pilot launching this week, the company said. Overall, Virgin Media has about 4 million pay TV subscribers.

The deal will give these subscribers access to such Netflix original series as House of Cards, Hemlock Grove, Arrested Development and Orange Is the New Black and other content.

Financial terms weren't disclosed.

"Virgin Media TiVo customers will be able to easily search and browse titles across Virgin TV’s entire collection of films and TV programs, as well as from Netflix and other content apps, including BBC iPlayer," Virgin Media said.

“The U.K. has given Netflix a fantastic welcome, and we’re excited to be partnering with Virgin Media to bring an amazing Netflix experience to Virgin Media customers," said Bill Holmes, global head of business development at Netflix.

Dana Strong, Virgin Media’s COO, said: "Netflix is a fabulous addition to Virgin Media TiVo, enabling our customers to enjoy even more of their favorite shows and movies simply and easily -- all through their TV set-top box and at outstanding value."

“Virgin Media TiVo offers different ways to watch, either subscription or pay per view, all seamlessly integrated for simple, intuitive viewing so there’s a world of great entertainment at your fingertips and everyone can be sure of the perfect TV moment.”

For the pilot program, the Netflix app will be available in a section of Virgin Media TiVo boxes where current Netflix subscribers will be able to log in, while others are able to sign up for the service. Netflix will handle the billing relationship with customers.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai