Yahoo Finance Sky bundles Netflix in bid to break into more homes
Sky will include Netflix in its pay-TV packages for the first time from November, using the popularity of the streaming service to increase uptake of its own on-demand programming and latest set-top box.
Netflix will be bundled with Sky’s own boxsets of programmes such as Succession and Patrick Melrose in an add-on costing £10 per month on top of a subscription.
The plan will be more expensive for households than signing up directly with Netflix at £7.99 per month. However it will include 350 extra boxsets from Sky, which otherwise cost £5 per month, making for an overall saving of £2.99 per month. It will also mean that Netflix programming is integrated into the Sky Q interface rather than accessible only via the Silicon Valley company’s own app.
The pricing structure is designed to make it more difficult for Netflix to take over in pay-TV households by ensuring it is sold only alongside Sky’s own programming with both sides enjoying a boost to sales.
The partnership has been unveiled as Comcast and Disney, via 21st Century Fox, prepare to do final battle over the future ownership of Sky in the next few day. Partly in response to the power of Netflix, they are seeking control of Sky’s 26 million pay-TV households across Europe. The takeover tussle could go to sealed bids this weekend.
Sky struck a deal to distribute Netflix earlier this year after protracted negotiations. The agreement was a major step for Sky towards a role as an aggregator of streaming services. For Netflix it grants access to to more than 3.6 million Sky Q homes, which are likely to be more loyal than its own direct subscribers.
Sky previously jealously guarded its direct relationships with consumers but has adopted a more open approach in response to the rapid rise of subscription streaming. Netflix has quickly built up more than nine million UK subscribers while Amazon has around five million.
Netflix entered the UK market six years ago and initially positioned itself as a threat to Sky’s film channels, but quickly changed tack to focus on boxsets as it became clear there was strong demand of on-demand of series acquired from the BBC and others. Netflix is now ploughing billions into its own original productions to bolster its catalogue as traditional broadcasters increasingly seek to build their own subscription streaming services.
The success of Netflix has prompted Sky to increase its own spending on original productions in an attempt to retain subscribers as competition increases. The rise of streaming services priced well below a traditional satellite or cable packages has meant more consumers, particularly in younger households, are taking a pick and mix approach to television to reduce their bills.
While Sky’s core satellite business has not been as badly affected by the trends as US cable operators, market growth is now concentrated at the lower end. As well as integrating Netflix in its premium service, Sky will offer it a standalone app on its own streaming service Now TV.
