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Netflix Ups Talks With Cable Operators

14 Oct, 2013 By: Erik Gruenwedel

Streaming pioneer in advanced talks with regional cablers to add app to existing set-top boxes

Netflix reportedly is in discussions with domestic cable operators about adding its app to set-top boxes allowing subscribers to search for movies and TV shows on the Internet, in addition to pay-TV.

While Netflix has had talks with Comcast and Time Warner Cable, discussions are more advanced with regional and smaller cable operators using TiVo set-top boxes, according to The Wall Street Journal and Bloomberg, which cited sources familiar with the situation.

Heretofore, Netflix has expanded its subscriber base through video game consoles, Blu-ray Disc players, streaming devices and mobile phones.

Los Gatos, Calif.-based Netflix, which has more than 35 million subscribers, has for some time made no secret a desire to subcontract its over-the-top video service to multichannel video program distributors (MVPDs) such as cable, satellite and telecommunication operators.

MVPDs, though leery of partnering with an OTT service considered their No. 1 competitor, are eager to retain and lure subscribers through Netflix’s pioneering content recommendation software, user-friendly technology and brand awareness.

“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,” Netflix CFO David Wells told the Goldman Sachs Communacopia confab last month in New York.

Indeed, Netflix in September inked a deal with Virgin Media in the United Kingdom that enabled its 1.7 million subscribers using TiVo boxes access to Netflix through a separate subscription. Swedish cable operator Com Hem became the second international MVPD to sign up Netflix, and will begin offering the SVOD service via TiVo boxes in December.

Google Fiber is the only domestic MVPD currently offering Netflix through its set-top box. TiVo, creator of the DVR, was the first to offer Netflix in the United States.

“Our partners are interested in delivering Netflix to their subscribers. We stand ready to replicate our well-received offerings with Virgin and Com Hem with any partner or future partner,” TiVo spokesperson Steve Wymer said in a statement.

BTIG Research analyst Richard Greenfield believes integration of Netflix by domestic MVPDs will be slow as the industry has done well leasing set-top boxes to subscribers on top of bundled channel packages. Greenfield said that despite growing interest among consumers to own their own IPTV hardware (i.e. set-top box, Blu-ray player, streaming device), MVPD adoption of the technology will advance at glacial speed.

“With the prices of IP-enabling TV devices falling, programmers need to realize that trying to maintain separate windows/platforms of content availability is futile,” Greenfield wrote in a recent blog post. “The consumer sees no difference between starting season one of ‘Breaking Bad’ this evening on Netflix (on their living room TV) versus watching ‘Chicago Fire’ on NBC. Let the best content win.”

Netflix reports third-quarter financials Oct. 21.





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