March 7, 2012
Netflix In Talks To Become Just Another Cable Channel
Chief Executive for Netflix, Reed Hastings, is in discussions to add the online movie streaming service to cable operators in what would be would be a major about-face for many in the traditional cable industry who had initially seen Netflix as a threat to their $100 billion-a-year business, reports Yinka Adegoke and Lisa Richwine for Reuters.
Such talks could lead to Netflix becoming available as another on-demand option for cable subscribers through their set-top boxes, according to three people familiar with the talks.
If a partnership came to fruition, a cable operator might offer Netflix as an additional option added onto a subscriber´s cable bill, according to Adegoke and Richwine.
The largest players in the cable business already have streaming content available. Comcast just launched its own streaming service, Streampix, targeted at its own subscribers. Time Warner Cable could do it; though HBO is tied with corporate cousin Time Warner, reports Eric Savitz for Forbes.
Verizon has partnered with Redbox and has started its own streaming service. That leaves AT&T uVerse or Cablevision and Cox with no clear partner.
Hastings, speaking at an investor conference last week, said, “It´s not in the short term, but it´s in the natural direction for us in the long term. Many (cable service providers) would like to have a competitor to HBO, and they would bid us off of HBO.”
Competition between Netflix and HBO has been on the rise the past few months with HBO no longer providing DVDs of its shows to the video streaming giant, writes CNET's Dara Kerr.
In February it invested in the Australian version of Netflix called Quickflix. Meanwhile, Netflix debuted its self-produced TV series similar to HBO´s TV show the “Sopranos,” called “Lilyhammer,” and reportedly plans to launch other streaming shows later this year.
Netflix is remaining quiet regarding any specific comment on any talks with cable operators.
Netflix primarily offers older TV shows and movies through its streaming service and it had been seen as a threat by some cable operators and cable networks worried that the $7.99 a month service would lead to customers dropping the much more expensive cable TV package, a fear that has become known in the industry as “cord cutting.”
Time Warner Chief Executive Jeff Bewkes publicly dismissed Netflix as a serious threat and has been much more positive about Netflix, in part because the service has boosted their coffers by licensing the older shows which have little exposure anywhere else.
Time Warner Cable is the first major cable company to stick its neck out with a trial in Texas to charge users for the amount of bandwidth they use. Online video is commonly acknowledged as the heaviest share of internet traffic.
If Netflix does partner with a cable company, the video streaming service could become available to cable subscribers as another option to use through their set-top boxes, Reuters notes. However, even if Hastings strikes a deal soon, the actual logistics may still take awhile because of having to rearrange licensing deals with programmers and contracts.
On the Net:
- Time Warner Cable
- AT&T uVerse
- Cox Communications