Partnership Deals Give Netflix Access to More Than 300M Households, Report Finds

Thanks to carriage deals with the likes of Sky and CanalPlus, the streaming giant now has access to nearly half of all pay-TV subscribers outside of China, a new report by Ampere Analysis finds.

Netflix's strategy of working with, not competing against, major pay-TV operators, is paying off, according to a study published Monday by media research group Ampere Analysis.

The report finds that Netflix has theoretical access to more than 300 million pay-TV households worldwide, almost double the company's current global subscriber base of 158 million, thanks to an increasing number of partnership deals with pay-TV companies. Just this year, Netflix has signed more than 15 deals with major international pay-TV operators.

By the end of 2018, three-quarters of pay-TV subscribers in Western Europe had contracts with Netflix partner operators, the report found, meaning pay-TV customers could access Netflix via their pay-TV company's set-top box. In North America, up to 86 percent of Netflix pay-TV subscribers were able to access the streamer via their operator's set-top box, Ampere found.

In total, Netflix has theatrical access to more than half of the world's pay-TV subscribers outside of China, a country where it is not allowed to operate, Ampere said.

Netflix has made a concerted effort to sign carriage deals with pay-TV operators as a means of extending its global reach. In October, the company launched on France's CanalPlus service, following a similar deal with Comcast-owned Sky in 2018. Ampere noted that all major pay-TV operators in France now carry Netflix, a reversal of previous hostility to the streamer in the territory.

“The increase in the number of pay-TV partnerships with Netflix marks a distinct shift in the industry, as more and more of the streaming giant’s traditional ‘enemies’ cosy up through onboarding deals,” said Elinor Clark, and analyst at Ampere, referring to carriage agreements.

Netflix isn't the only streamer looking to play nice with pay-TV. HBO has long-running output deals with local pay-TV operators worldwide and, as HBO parent WarnerMedia rolls out its own streaming service, HBO Max, the company has made it clear it plans to continue those business relationships.

In late October, HBO renewed its long-running programming output deal with Sky for Europe and extended their co-production relationship to series for HBO Max.

The Ampere report argues that pay-TV “onboarding” deals may be key if Netflix is to continue its current pace of global growth. The report notes that Netflix has yet to attract many of the large pay-TV operators in Central and South America, in the Asia Pacific region and in Central and Eastern Europe to agree to carry the service. Together, these markets — in which Netflix currently has around 40 million subscribers — are home to nearly 400 million pay-TV subscribers.