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.
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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.