Netflix: (NFLX, $96, up 1% yesterday)
Netflix announced a new agreement with Enseo, which will spread the Netflix service to more hotel rooms around the world. Enseo runs entertainment platforms in hotel rooms through their Entertainment Experience or E3. E3 allows hotel guests to log into their streaming media accounts on their rooms’ televisions, letting them access their favorite online shows, playlists, and other personalized streaming content. The platform currently lets users log into their Netflix, YouTube, Pandora, HuluPlus, and Crackle accounts.
E3 is currently available at more than 300 hotels across the US. E3 has already been installed in properties owned by Marriott, Hilton, and La Quinta. Even though E3 does not directly generate cash flow for the hotels, it is very smart new way of doing business because of the indirect savings derived from guests not streaming their shows over hotel Wi-Fi. Additionally, the licensing fees hotels pay Enseo in some cases might be cheaper than the costs the hotels are paying to other vendors. In other words, hotels are now cutting the chord too!
The reception by hotel guests regarding E3 has been fantastic considering the lower cost relative to higher priced HBO pay per view services, among other factors. For example, five properties with 8,300 rooms have the service at Gaylord Hotels, where guests are streaming more than 1,400 hours of video per day. “Enseo has shown they work hard to meet and exceed our guests’ needs and expectations,” says Mike Stengel, Gaylord Hotels’ senior vice president of operations.
As a reminder, Netflix announced its global expansion in January, bringing 130 new countries on board. The company now has 83 million total subscribers. However, its international subscriber base only grew by 1.5 million in the last quarter, which was a disappointment driven partly by China’s regulatory climate.
BMR Take: The Enseo deal is yet another sign of Netflix continuing to take over the movie and TV markets on a global scale. We see favorable long term prospects pushing the stock higher over the coming months and years.