On September 29, 2015, Netflix (NFLX) announced it has partnered with Virgin America (VA) airlines to offer in-flight streaming service. This will allow people on board a Virgin America airline flight to access their Netflix accounts and view Netflix content on electronic devices. Netflix plans to offer a free 30-day trial for fliers not subscribed to Netflix.
The in-flight streaming service will be free to Virgin America passengers until March 2, 2016. Virgin America has also partnered with ViaSat (VSAT) to offer faster wi-fi on the airline’s Airbus A320 aircraft.
Virgin America is also providing the popular Netflix show House of Cards for free on its in-flight entertainment platform.
Now let’s see why Netflix is offering in-flight streaming of its content.
Netflix is trying to increase domestic memberships
Netflix expects its growth in the United States to be 60–90 million members. According to Netflix’s 2Q15 letter to shareholders citing the company’s internal forecasts, Netflix expects ~43 million memberships in the United States in 3Q15, as you can see in the above chart. As the partnership with Virgin America suggests, Netflix is trying to achieve growth in US memberships by providing new avenues for using its streaming services.
Netflix is trying out new ways to retain existing subscribers and woo new ones, as pay TV also plans to compete in the over-the-top, or OTT, market. The OTT market in the United States is heating up because of how new entrants and existing OTT players are using various strategies to gain new subscribers and retain existing ones. For example, Amazon’s (AMZN) Prime Instant Video service will be available to Amazon Prime members on JetBlue (JBLU) flights later this year when JetBlue launches its in-air broadband Internet service called Fly-Fi.
You can get a diversified exposure to Netflix by investing in the iShares Russell 1000 Growth ETF (IWF), which holds 0.46% of the stock.