The new arrangement with the UK cable company is a breakthrough for Netflix: It’s the first time the service, built on the Web, will appear alongside traditional cable channels on a pay TV service. Customers still need to pay extra for a Netflix subscription, but it will be accessed via an app for Virgin Media customers who use its set-top boxes from TiVo. It will first be offered to 40,000 Virgin Media TiVo households and will be available to all 1.7M by year end, according to the company that is owned by John Malone’s Liberty Global. Although the deal probably won’t result in a financial windfall for Netflix, its inclusion in a pay TV package “is an important shift in mindset, signifying that [Netflix] is viewed increasingly as another network and less as competition” for distributors, Janney Capital Markets analyst Tony Wible says. Since users can search Netflix offerings alongside traditional TV shows, he adds, “we expect to see higher utilization of the [Netflix] service, which we believe will come at the expense (at least in part) of traditional TV networks, particularly for lesser watched programming.” Investors apparently agree: Netflix shares are up nearly 4% in early trading to $306. That passes Netflix previous high of $304.79 on July 13, 2011 — just before its ill-fated decision to split its DVD rental and streaming businesses, resulting in a huge price increase for subscribers who wanted both services. A little more than a year later Netflix hit bottom, with a low of $52.81. Shares have appreciated 447% over the last 12 months as the company continued to expand in overseas markets and successfully introduced original programming.
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