Netflix Stock Jumps After Partnership with Europe’s Sky TV Announced
Millions of Sky TV customers in Europe will be able to watch Netflix through the Sky Q Platform.
Last week Netflix (NASDAQ: NFLX) announced a partnership with Sky TV, a European-based satellite TV subscription broadcaster. The first-of-its-kind deal caused Netflix stock to jump from $290.39 per share on March 1 to $321.16 yesterday. Just a month ago, Netflix stock was valued at $250.10 (February 8), making an increase of $71.06 in a month’s time.
Through the new partnership, Netflix will bundle its programming into a new Sky TV subscription package, giving millions of Sky TV customers the ability to access Netflix through the Sky Q Platform. Both new and existing Sky TV customers can access the Netflix programming which includes more than a thousand hours of UHD programming, complementing Sky TV’s UHD programming, said Netflix. Though customers can access both services from one app, they’ll receive one monthly bill.
‘We are delighted to partner with Sky to bring the latest technologies and great stories under the same roof. With this innovative new partnership and Netflix’s stellar line up of original content from across the world, Sky's customers will be able to seamlessly access and enjoy all the best entertainment in one place,’ said Netflix chairman and CEO Reed Hastings in the announcement.
Jeremy Darroch, group chief executive of Sky, also commented on the new partnership.
‘The exciting new features coming to Sky Q will enable Sky customers to access even more of the best entertainment delivered over the best product platform. By placing Sky and Netflix content side-by-side, along with programs from the likes of HBO, Showtime, Fox and Disney, we are making the entertainment experience even easier and simpler for our customers. Our recent announcements mean we will extend our leadership in delivering customers the best viewing and user experience in Europe,’ Darroch said.
Netflix will launch as part of the new Sky TV pack in the United Kingdom and Ireland within the next year. After that, Netflix will launch on the Sky Q platform in Germany, Australia and Italy, Netflix said. Pricing and billing details have not yet been released.
Currently, Sky serves 23 million customers in seven countries including the United Kingdom, Ireland, Germany, Austria, Italy, Spain and Switzerland. Its annual revenue for 2016-17 was £12.9 billion (or $17.92 billion U.S.). By comparison, in 2017, Netflix reported total revenue of $11.7 billion with 110.64 million paid subscribers (52.81 million U.S. and 57.83 million international).
Though this partnership will not likely yield new subscriptions for Netflix or Sky immediately, in its latest financial report, Netflix estimated international net additions in the first quarter of 4.9 million. In Q4 2017, Netflix reported it added 6.36 million net additions, compared to its guidance of 5.05 million, which was a record for the streaming company. Also, 2017 was the first full year of positive contribution from the international segment of its business.
While Netflix did not address this partnership specifically in its financial report, new products and partnerships are part of the company’s growth strategy for 2018.
‘We are partnering with a growing number of MVPDs and ISPs across the world to the benefit of our mutual customers,’ Netflix said in its Q4 2017 shareholder letter. ‘These partnerships make it easier for consumers to sign up, enjoy and pay for Netflix, while our service allows our partners to deepen their relationships with these subscribers.’
This is another situation where it looks like everyone wins – TV viewers, Sky TV subscribers, Netflix subscribers and investors. This partnership fits nicely into Netflix’s strategy, helping Sky TV solidify its relationship with subscribers while also getting access to a new international audience for Netflix’s own purposes. If the stock jump is any indication, investors are impressed as well. We look forward to learning more about this partnership and will share additional details as they are announced.