Given recent news from across the Atlantic, it looks like Netflix is getting serious about its European expansion efforts. A report in the German news magazine “Manager” suggests Netflix, Inc. (NASDAQ:NFLX) is in advanced talks with Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) (FRA:DTE) regarding a collaboration before Netflix’s planned solo launch in Germany this fall.
In addition to Germany, Netflix, Inc. (NASDAQ:NFLX) has already announced plans to launch its streaming service in Austria, Switzerland, France, Belgium and Luxembourg later this year.
Deutsche Telekom open to deal
The report quotes anonymous inside sources as saying Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) (FRA:DTE) was open to cooperating with Netflix, Inc. (NASDAQ:NFLX) even though the streaming titan’s VoD service would be a direct competitor with Telekom’s on-demand video service.
Deutsche Telekom began offering its IPTV Entertain subscription service back in in 2006, providing access to 160 TV channels (including 45 in HD), as well as a video library consisting of 20,000 plus films and show episodes.
Analysts point out that Netflix, however, brings significant marketing muscle and a strong line up to the table as far as hitting the ground running in a still relatively immature market, which motivates DT to consider hedging its bet and working with Netflix, Inc. (NASDAQ:NFLX).
Could give Netflix access to 14 million new customers
A number of analysts have chimed in to say the talks between the two digital media firms are a positive indication for Netflix, Inc. (NASDAQ:NFLX) as it moves into Europe. Given that Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) (FRA:DTE) is Germany’s largest ISP, a tie-in with DT would give Netflix built-in access to millions of new customers.
Deutsche Telekom has close 12 million broadband customers in the country, but currently only has a few more than 2 million IPTV subscribers. A deal with Netflix certainly has an upside for DT as it could result in much faster market development, and a deal with the owner of The House of Cards would cut them in on a larger share of a growing market opportunity.