In an effort to continue to expand their subscriber base and
to create a second revenue stream, Netflix is in talks with Comcast, Suddenlink
Communications and several other cable operators about integrating its streaming
video service with leased set-top boxes. Obviously U.S. MVPD's have taken
notice of Netflix’s new arrangement with Virgin Media and, more recently, with
Sweden’s Com Hem and are weighing out the potential future impact those deals
may have state side. At this point the
company's mix of original series and large catalog of TV shows and movies, has
essentially become a new premium subscription service that can do battle with
HBO, Starz and Showtime. According to the Wall Street Journal, Netflix doesn’t
have all the distribution rights it needs to offer its entire service on leased
boxes in the U.S., at least not yet.
According to industry insiders, at this point in the game,
Netflix would not gain much from a U.S. cable deal. The current distribution of
cable STB's with IP capabilities, is very small and the overwhelming number of
boxes deployed in the field today don’t speak IP (which at this point is
critical to support a Netflix app). While cable operators are starting to
deploy IP boxes, they will represent a fraction of the market for the near term
future.
Technology aside the WSJ reports the biggest holdup between
Netflix and U.S. cable companies is cable providers' fear of losing viewers of
its own services and advertising. Currently they are 30 million Netflix
subscribers in the U.S. alone and they will continue to access the service one way
or another – via gaming consoles, retail TiVo boxes, Roku boxes and smart TVs –
with or without cable’s help. In my opinion having Netflix on the set-top box
would at least keep subscribers engaged with the cable video platform and
prevent them toggling to a different video input and a different video device. MORE: MediaDailyNews - Netflix May Cut Deals with Cablers - 10/14/13 and Adweek - Is Netflix Looking for Cable Distribution Deals? by Sam Thielman 10/14/13
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