IHS: Netflix integration ‘net positive’ for pay TV operators

Integrating Netflix has had a “net positive impact” on traditional pay TV operators like Virgin Media and BT, according to IHS. 

The research firm’s ‘Netflix on Pay TV: A Marriage of Convenience’ report claims that many of the operators working with Netflix have seen customer satisfaction ratings improve under the partnerships, “which have helped foster positive operational performances.”

Currently Netflix has partnerships in place with 25 pay TV providers, but “many more” deals are likely to follow after Netflix rolled out in 130 new countries last month, according to IHS.

“Netflix is a both less lucrative and more dangerous content partner to work with than the other premium networks pay TV providers traditionally partner with, such as HBO. But collaborating with the ever-popular streaming service is necessary for many operators positioning their platforms as one-stop-shop ecosystems for TV and video content,” said IHS Technology research director, Ted Hall.

The research claims that there is a risk that Netflix will put pressure on some pay TV operators’ core services in the longer-term – including movie packages and video-on-demand (VoD) offerings.

It also cautions that Netflix partnerships are “not appropriate” for all operators, with companies like Sky, that invest in their own movies and entertainment content, such as Sky, typically still wary of working with the SVoD firm.

However, the results from the survey “generally support the view that third-party video-steaming services positively impact operators’ performance and complement traditional channels and VoD offerings,” according to IHS.

“Netflix plays at least some – likely small – role as an upsell driver for some operators, whose customers can only access the app via their most advanced set-top boxes. This is the case for 10 of Netflix’s 25 operator partners, primarily those using TiVo as their technology partner, in addition to Orange, Bouygues and Elisa,” said Hall.