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What Is Netflix Getting from Bundling Arrangements?

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Bundling helping Netflix in customer acquisition

Netflix (NFLX) has entered partnership arrangements with mobile operators and cable providers to bundle its video service with their wireless and pay-TV plans.

The company disclosed this month that it now works with ten different bundling partners around the world. Netflix says it likes the bundling strategy. Its chief product officer Gregory Peters said during the first quarter earnings conference that bundling agreements help the company reach customers that may be slow to sign up directly. Therefore, bundling arrangements are great in helping Netflix grow its customer base and revenues.

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Netflix’s bundling partners

Netflix’s wireless bundling partners include T-Mobile (TMUS), which serves close to 80 million customers across the United States. T-Mobile is seeking to combine with its rival Sprint (S), which could further extend Netflix’s mobile reach if bundling with T-Mobile continues after the merger. Netflix also last year entered a bundling agreement with Telefonica (TEF), a multinational telecom company that serves millions of customers in 17 countries. Netflix also has a service bundling arrangement with cable providers Comcast (CMCSA) and Altice (ATUS).

In addition to partnering with service providers to help extend its customer reach, Netflix has also partnered with device makers to preload its app in their products such as smartphones and television sets. Many Android TV sets come with the Netflix app preinstalled in them.

Netflix made a profit of $344.1 million on revenue of $4.5 billion in the first quarter, which ended in March.

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