Netflix zooms past analysts’ expectation riding on cable business alliances

Alliances with former foes have been instrumental in its phenomenal growth in the U.S. and overseas.

In a development that underscores a tactical shift in the U.S. cable business, a growing number of operators are forming business alliances with their former foe, Netflix Inc.

Charter Communications Inc, the third biggest distributor in the U.S. is expected to make Netflix’s streaming content available through its set-top boxes.

The move mirrors dozens of top U.S. pay television operators adopting a model that was first rolled out in Europe. As a result a few U.S. providers are likely to start selling streaming services as part of their Internet and video packages.

In France, the same approach is being adopted by Altice NV with the company trying to extend the deal to the U.S, said two sources who spoke on the condition of anonymity since the discussions are private.

“Our whole model is about cooperation with many of the (streaming) providers,” said Dexter Goei, Altice USA’s CEO.

Netflix has also indicated it wants to take the arrangement elsewhere, the timing of the new deals are however uncertain.

“We’re now looking at proposals for including Netflix in some services and beginning to learn the bundling part of the business,” said Reed Hastings, Netflix’s CEO. “We’re interested in expanding that.”

Additional tie ups in the near future could help boost Netflix’s user base in the United States, say market analysts.

The number of subscribers is a key metric for Netflix investors, and the breakneck growth has made the company a darling on Wall Street.

As of June 30, Netflix has reported 51.92 million U.S. streaming customers with 52.03 million in international territories. These numbers have handsomely beaten analysts’ forecast.

As per John Blackledge, an analyst at Cowen & Co, the addition of Netflix to set-top boxes have significantly helped the company top analysts’ expectations in the U.S. market.

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