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Netflix hits the buffers as explosive UK growth cools

Netflix chief executive Reed Hastings had led explosive growth in the UK - EPA

The explosive growth of Netflix in the UK is coming to an end, according to data seen by The Sunday Telegraph.

The figures raise new questions over its business in the wake of Disney’s ­decision to take its films off the steaming service in the US.

Netflix does not publish UK subscriber numbers, but a confidential analysis by a well-placed industry player shows that its rapid expansion into British homes may be reaching its limits.

For most of last year the company was stuck on around 5.7 million subscribers, according to the figures, which are partly based on information for the Broadcasters’ Audience ­Research Board, a television industry body. The data also includes private consumer research.

Netflix received a seasonal boost over Christmas, adding another 400,000 subscribers as its acclaimed royal drama The Crown attracted new audiences. It has since stagnated again, however, and has remained on around 6.1 million users this year.

The figures represent a significant slowdown. After its UK launch in 2012, Netflix consistently added hundreds of thousands of new customers every quarter, according to the data.

Signs it is “topping out” will add to pressure on the company to find new sources of growth, with Amazon’s streaming service gaining ground.

Netflix June 2017 best films and shows

One of the keys to Netflix’s success in the UK was its deal with Virgin Media to provide its service via set-top boxes as part of a cable bill.

It has not yet agreed such an ­arrangement with Sky, which has more than twice as many pay-TV households as Virgin Media. It sees itself as in more direct competition with Netflix as a major maker and buyer of films and series.

Sky is also understood to have ­demanded control over how Netflix programmes are presented on its set-top box, which has been a major obstacle to a deal more recently.

The tension echoes a long-running row between Sky and the BBC over the iPlayer.

The corporation insists on control over its programming, while the pay-TV giant wants to be able to mix it up with its own offering and those of other broadcasters to make recommendations to viewers.

Netflix subscribers

Disney’s decision last week to withdraw its films and series from Netflix in the US and launch own-brand streaming services from 2019 signalled a new relationship with the traditional pay-TV industry.

Streaming is expected to take a growing share of viewing, and producers and distributors are wary of handing too much control of the future to Netflix and Amazon.

Disney’s move knocked Netflix shares by 4pc, although they trade at a price-to-earnings ratio of more than 200 on expectations of continued strong growth.

Pay-TV’s push back against streaming is building, however. Two industry sources revealed that last year Virgin Media was close to a deal to add Amazon’s streaming service to its subscription packages, before its parent company Liberty Global stepped in to pull the plug. It is understood the pan-European cable giant held fears about the long-term threat Amazon could pose to its pay-TV business.

Netflix declined to comment on its slowing growth in the UK.