Netflix recently inked its first major deal with a U.S. pay-TV operator.
Dish Network Corp and Netflix Inc. are joining together in order to bring the Netflix app to Dish subscribers. The latest set-top boxes will include the streaming television app, but the offer won’t be extended to all Dish network customers.
Not sure how this will play out, but it’s good for Netflix. There are 14 million paying TV customers at Dish, and the company declined to reveal how many would receive the Netflix option. The companies also did not reveal whether or not customers will be able to bundle their Netflix subscriptions with their Dish TV service.
This deal is a win for Netflix who has been trying to negotiate with U.S. cable, phone and satellite-TV providers for the last several years. Their first step was to negotiate the deals with entertainment companies who provide content to Netflix. They then brokered several deals with international pay-TV operators, but many American companies were hesitant to make the same deals. They worried about risks to their premium and video-on-demand revenues.
In addition, Netflix is also in a conflict with Comcast Corp – its biggest competitor. The streaming service has been in opposition to Comcast’s proposed acquisition of Time Warner Cable Inc., the second largest cable provider. Before the Dish deal, Netflix had only been able to contract with smaller operators like Atlantic Broadband and Suddenlink Communications.
Good terms for those in deals with Netflix. Netflix has been so eager to make these deals work that it has been offering very agreeable terms. In some current U.S. deals, Netflix has been paying providers a one time “bounty” fee as a type of “signing bonus,” in addition to a monthly fee for new subscribers who sign up through the set-top box set-up.
Still, for pay-TV providers the Netflix deals are not as appealing as deals with HBO and other premium channels. In addition, they don’t receive a cut of existing subscribers’ Netflix bills. Still, Netflix hopes that the Dish TV deal is a sign of things to come. It could be a way for the company to keep its edge over Amazon Prime and other streaming services.