Astro announces partnership with Netflix

by AZALEA AZUAR / pic credit:

NETFLIX Inc’s partnership with Astro Malaysia Holdings Bhd is expected to reflect positively for the two parties.

According to CGS-CIMB Securities Sdn Bhd analyst Kamarul Anwar, the deal is similar to the Astro-Disney+ Hotstar collaboration announced earlier this month in which a single force will not fuel Astro’s new earning growth cycle.

“Astro’s digital convergence strategy will require time, as Malaysians may only see the value of the bundled offerings when Astro brings in the 15-or-so disparate subscription video on demand (SVOD) services to cater to every member of the household by end of financial year 2021 (FY21) to FY23,” he explained through a research report.

While Astro is trying to manage, the stock still offers FY21/FY22-FY24F yields of 7.5% to 10.2%.

Netflix streaming service has been available in Malaysia since 2016, but they have yet to gain scale in a piracy-rampant market.

The analyst said Netflix’s paid subscribers in Malaysia did not account to 2% of the country’s population.

“Thus, we surmise Netflix’s strategy should be similar to Disney+ Hotstar — bundling the SVOD service with Astro’s pay-TV service to jack up its subscriber count in one fell swoop,” Kamarul Anwar added.

Although the Walt Disney Co would likely charge Astro a bulk rate for the Disney+ Hotstar subscriptions, it gains from volume play.

“We postulate that on the subscriber’s end, the Netflix integration into Astro should be similar to how it is done by the UK’s Sky Ltd (Unlisted); existing Netflix subscribers can sync their accounts with Sky TV and broadband packages to get savings from a bundled offering (see overleaf),” he said.

The Netflix-Astro deal works the same with Disney+ Hotstar, whereby customers can still subscribe directly to Netflix without Astro, while existing Astro customers who are not subscribed to Netflix will get an attractive discount for Netflix streaming services.

With the partnership, Astro and Netflix’s customers are now able to enjoy streaming through Netflix’s services when the Ultra Box launches and in the coming months for Ulti Box users.

The partnership allows Netflix and Astro subscriptions to be under a single bill, hence providing easy access for payment at the best value.