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Netflix Gooses Movistar + Uptake in Spain

MADRID — Telefonica’s Movistar +, the biggest pay TV-SVOD service in Spain, is feeling the Netflix effect. And for the good.

Following Netflix’s launch on Movistar + on Dec. 11, more than one third of new subscribers to Movistar, Telefonica’s telephony, internet and TV service, have taken the new Netflix option. 35% of established clients with access to packages now offering Netflix for a mark-up – €10 ($11) for clients to the Movistar +’s Fusion Total + package, for example – have also opted for Netflix.

Unveiling the statistics, Movistar and Netflix made no indication of just how Netflix carriage is accelerating subscriber growth at Movistar +.

But, announced memorably May 24 by Telefonica CEO José María Alvarez Pallete and Netflix CEO Reed Hastings, the latter hidden behind a Salvador Dali mask and “Casa de Papel” outfit, the Telefonica-Netflix deal still looks like a win-win situation.

The Movistar + carriage deal comes late in the day, five years after Netflix signed its first carriage deal with U.K. cable operator Virgin Media.

Since then, Netflix has signed a total 51 carriage deals with operators around the world, from 2013 through 2018, according to IHS Markit.

“At the beginning, Telefonica and many pay TV players saw Netflix as a threat to pay TV, cannibalizing its movie and series packages,” said María Rua Aguete, executive director, technology, media & telecom at IHS Markit.

She added: “Five years later, there’s a general realization that that’s not the case. Telefonica as a telco gets revenues not just from video but also from broadband, telephony and mobile. For them, Netflix represents another channel with movies and series that consumers want to watch.”

Launching in 2015, Netflix has seen robust growth in Spain, hitting 2.2 million video subscribers by year-end 2018. Only Telefonica, with 4.1 million, is bigger.

“People want to watch Netflix. Integrating Netflix on the Movistar + platform can only be positive,” Rua Aguete observed.

Having Netflix on board also gives Telefonica valuable insight into customer behavior as it repositions as an avant-guard, high-tech home entertainment and communications one-stop shop, Rua Aguete argued.

For Netflix, the carriage deal allows subscribers to Spain biggest pay TV platform to catch Netflix on their TV sets. That mixed model – OTT viewing on TVs, can prove attractive alike to millennials – the picture’s far better – and parents who’d like occasionally to watch TV with their at home but rarely seen offspring.

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