Netflix negotiating with cable providers to offer set-top box app

By Mike Flacy October 14, 2013

netflix negotiating with cable providers to offer set top box app — Image used with permission by copyright holder

Detailed recently by the Wall Street Journal, Netflix is currently in talks with several U.S. cable providers hoping to offer a software application to cable subscribers through existing set-top box hardware. According to the report, Comcast and Suddenlink Communications are two of the companies that are talking with Netflix representatives about adding the app to set-top boxes. Hypothetically, these types of partnerships could open up a new audience to Netflix; cable subscribers that have traditionally avoided Internet streaming services in favor of more expensive premium cable programming.

While Netflix is definitely a competing platform in relation to cable programming, one potential boon for cable providers would be bundling premium cable service and high-speed broadband Internet service to generate greater revenue from the existing subscriber base. In addition, cable providers could upsell broadband packages that offer faster connections in order to access Netflix’s Super HD streams as well as 3D programming and eventually 4K content. However, cable providers have been resistant to Netflix’s Open Connect platform, a service that helps decrease content delivery times for high definition video.

Interestingly, cable providers could also use the Netflix platform as a potential bargaining chip when in negotiations with channels over new contracts. For instance, Time Warner could have directed customers in New York and other CBS blackout areas to check out all the CBS programming on Netflix during the recent contract spat over retransmission fees. Assuming Netflix is used as leverage during this type of negotiation, cable providers could offer free access to Netflix for customers that have to put up with a blackout.

According to the report, none of the interested parties are close to a deal with Netflix, however Netflix did land a deal during September with Virgin Media in the United Kingdom to offer the app on the Virgin Media TiVo system. Regarding competing platforms, Time Warner Cable and Cox Communications are in talks with Google to add YouTube to set-top boxes.

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