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Netflix teams with global cable, cell carriers
Company’s expansion plan focuses on overseas subscribers
By Mark Scott
New York Times

NEW YORK — As he sat in his office in central Paris, Christian Bombrun, an executive at Orange, the French cellphone and cable operator, got an unexpected call. It was Netflix, the American streaming giant, proposing a deal.

Netflix was looking to offer its stable of movies and television programming to the 10 million Orange customers across France. What followed were six months of often-tense negotiations, as both companies wrestled over the details.

“There were some difficult discussions,’’ said Bombrun, director of entertainment and digital services for Orange in France. At certain points, both sides thought the talks would fail. But in the end, he said, “We got a deal done.’’

Such negotiations have become increasingly commonplace for Netflix as its global ambitions have taken the content-streaming service far from its California roots into markets across Europe, Latin America, and Asia.

The company’s partnerships with cable and cellphone operators worldwide give it almost instantaneous access to potential new users without having to spend a fortune on advertising and distribution deals in markets where its brand and content are often still relatively unknown.

This growing symbiotic relationship will take center stage on Monday when Reed Hastings, the company’s chief executive, gives the keynote address on the first day of the Mobile World Congress. The conference is an annual trade show in Barcelona, where executives from across the telecom, media, and technology worlds gather to meet and, potentially, sign new deals.

Hastings’ headline act — part sales pitch, part industry update — comes as Netflix’s attention has increasingly turned to its overseas subscribers.

The Orange deal, one of Netflix’s first international partnerships, is a case in point.

The two sides finally reached an agreement in late 2014, just as Netflix began expanding across much of Europe.

As part of the deal, Orange customers are offered a one-month free trial with Netflix and the ability to pay for the streaming service through their existing monthly contracts. Orange has also entered into an undisclosed revenue-sharing pact in France, which has often been wary of the potential for Netflix’s American shows to outmuscle local content.

But the talks were not all smooth sailing.

Along with the typical back-and-forth about how much revenue each side would receive from the deal, Orange was concerned that Netflix, whose European headquarters are in Amsterdam, had not signed on to French rules requiring online video distributors to fund local-language content.

Stéphane Richard, the company’s chief executive, also had said he would not work with Netflix, fearful that Orange would become a “Trojan horse,’’ potentially helping the streaming service gain a global following, only to then cast Orange aside.

But for cable and cellphone companies from Bulgaria to Bolivia, the calculation is simple. Though many of them initially resisted such deals with online content providers, gaining access to Netflix’s exclusive programming helps set them apart from local rivals, just as customers’ online habits have shifted toward video, particularly on their smartphones and other mobile devices.

“Netflix wants to be exposed to as many people as it can,’’ said Tom Harrington, an analyst at Enders Analysis, a media and telecom industry research company in London.

“Telecom operators want to keep people inside their walls, so they are willing to let Netflix in.’’

Netflix’s American revenue, $1.4 billion in the fourth quarter, still constitutes a majority of its sales. But after a somewhat stuttering start to its global expansion, its international revenue is quickly catching up, hitting almost a billion dollars in the three months through December.

The company offers its streaming services in 190 countries, and added more than 5 million new international subscribers in the fourth quarter, or more than double the number of new users in the United States, according to regulatory filings.