Once-troubled YouView is now breaking good

Move comes as internet TV service predicts  customer base has grown to 2 million

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The YouView internet TV service has had a chequered history to say the least, with numerous false starts since its inception in 2007.

But now, it can claim to be the fastest growing platform in the market. Not only that, but it has just signed an unprecedented deal with Netflix and is cutting the price of its set-top boxes.

The service is offering its users direct access to Netflix content including original dramas such as Marco Polo, which launches next month, and films such as The Hunger Games: Catching Fire.

It is set to announce early next year that its customer base has grown to more than  2 million, partly as a result of price cuts to the set-top boxes, which launched in 2012 at £299. New deals in the autumn should bring them below £149.

The internet TV service is offered in broadband subscription bundles from TalkTalk and BT. The latter announced 38,000 sign ups to its TV service in the last quarter and now works only with YouView, having stopped selling its own BT Vision boxes.

At the launch of the Netflix deal, Richard Halton, the chief executive of YouView, claimed a major breakthrough in getting the California-based video streaming service integrated with the TV platform. “Netflix just doesn’t do these deals. They don’t allow platforms to integrate their content into a unified search.”

Existing Netflix customers will be able to sign in via YouView.

Both BT and TalkTalk are expected to announce competitive deals for YouView access to Netflix, which normally costs £5.99 a month and has more than 3 million UK subscribers. BT has said a Netflix account can be paid via a BT bill.

Mr Halton denied that introducing pay TV elements to YouView would undermine the free-to-air ethos of the service. “What we were always concerned about was that people who did not want to pay a lot still got a great TV proposition,” he said. “The fact that you can opt-in to upgrade into paid services is a brilliant choice. It feels like with Netflix we have the full set.”

He said YouView aimed to build its customer base to over 10 million, by persuading remaining FreeView users to upgrade to the internet-based service. “Our ambition is no less than the 10 to 11 million FreeView homes. BT and TalkTalk between them have about 10 million customers and over 7 million of those are FreeView homes,” he said. “That is the opportunity.”

He claimed that the free and pay TV markets in the UK were quite distinct. “The free and pay markets have always been pretty stable – they have always been about 10 million free and about 13 to 14 million pay, once you add in Virgin Media.”

YouView has had a troubled history. In its early years it was known as Project Kangaroo, running into regulatory problems and incurring criticism that it was an anti-competitive cartel for the big public service broadcasters.

Lord Alan Sugar, the profile-raising YouView chairman, quit in 2013 after a feud with then Channel 5 boss Richard Desmond. For the past year new chairman Simon Duffy has been quietly building the business. Mr Halton claimed to have made peace with Virgin Media and its current boss Tom Mockridge.

YouView offers 70 TV and radio channels and the catch-up services of the main terrestrial broadcasters as well as on-demand content from Sky and UKTV. Mr Halton anticipates a range of “smaller content providers”, from arts institutions and NGOs to music streaming services, would come on to the platform via app-based services.

We should stay tuned.