October 14, 2013
Netflix Looks To Strike Streaming Deal With Cable Companies
Michael Harper for redOrbit.com - Your Universe Online
At least two media sources claim Netflix is in talks with American cable companies to deliver streaming movies to their set top boxes.
As many in the cable and content world worry about a “cable-cutting” trend, this move reveals a more cordial relationship between the cable companies and Netflix, their assumed enemy.
According to reports by Bloomberg Businessweek and The Wall Street Journal, Netflix is speaking with Comcast, Time Warner Cable and Suddenlink, specifically, to add its $7.99 streaming package into cable boxes. Customers would be able to watch their Netflix movies with their cable boxes rather than switch inputs or buy another box, such as those made by Apple or Roku.
Though these talks are said to be in their early days, Netflix was recently able to seal similar deals with Virgin Media, Inc. in the UK.
Spokespersons from Comcast, Netflix, Time Warner and Suddenlink all refused to comment on the new discussions.
In September, Netflix CFO David Wells hinted towards such a deal, saying: “We would love to reduce the friction to the end consumer, and to be available via the existing device in the home, which is the set-top box.”
According to Wells, the cable companies have been courting Netflix for nearly two years.
Bloomberg claims Netflix is farther along in conversations with smaller, regional providers who use TiVo boxes to deliver their wares. Even then, announcements for such a deal are said to be months away.
“Our partners are interested in delivering Netflix to their subscribers,” Said Steve Wymer, a spokesperson for TiVO in a statement earlier this month. “We stand ready to replicate our well-received offerings with Virgin and Com Hem with any partner or future partner.”
WSJ claims one potential hangup in conversations with the larger companies is an issue of technology. According to people familiar with the matter who didn't want their names used, Netflix wants to incorporate pieces of the Open Connect program into any streaming service offered on these boxes. Netflix believes the technology is important to the quality of their streams and should therefore be an integral part of any deal. It’s said the cable companies are wary of the deal for fear other content providers will want similar special treatment.
Another reason the talks may be hung up with these larger companies is fear of lost revenue. Cable companies have long offered 'a la cart' streaming of movies through their own proprietary services and have seen this as a major source of revenue. It had long been assumed that Netflix was seen as a threat to these businesses, and while talks between the two may suggest otherwise, some companies fear they could be opening the door to lost revenue in the future.
Sources told WSJ that certain cable companies worry Netflix could use the deal as a “Trojan-Horse” to get their app into the set top boxes only to begin selling pay-per-view movies on their own, thereby directly competing with cable’s side business.
Netflix is currently available on a number of devices and platforms, including Apple TV, Google's Chromecast, Microsoft’s Xbox, and even a number of “Smart” Internet-connected TVs. It’s also possible such a deal could be seen by the cable companies as a way to protect themselves from the rising “cord-cutting” trend by removing a key feature touted by these other Netflix providers.