According to the Wall Street Journal, Netflix is talking to several cable companies — most notably Comcast — about having a Netflix app that customers would get through their cable box.
There are already numerous ways for Netflix subscribers to get the service on their TVs — gaming consoles, streaming devices from Roku and others, the recent Google Chromecast dongle, and apps available straight through Web-connected sets — but these all require switching away from the cable box, reminding the consumer that, “Hey, maybe I don’t need this crazy-expensive service after all.”
So why the change of heart from the cable companies?
One hope is that customers who have cable but slower-speed broadband tiers might be encouraged to ante up for faster, more expensive tiers once they see how it improves the quality of streamed video.
It would also allow the cable companies to market their products as being Netflix-ready like many recently released connected-TV sets and the current generation of gaming consoles.
The Journal points out that cable companies who hook up with Netflix can use that as leverage the next time they have a big carriage fee dispute. Many of those fights now involve the rights for the cable companies to stream broadcasters’ content. If the carrier offers its customers Netflix and other streaming services, it can try to say to a stubborn broadcaster, “You don’t want to give us access to your streaming library? Fine, but you know all our customers now have easy access to Netflix, right?”
The Journal reports that a sticking point in the negotiations with Comcast, Time Warner Cable and others is that Netflix wants these companies to adopt some of its streaming tech to ensure a level of quality control for streamed videos.
Another concern is that Netflix might quietly transform into an even more direct competitor by using a set-top box app to start offering rental titles that would siphon off money from the cable companies’ on-demand offerings.
Netflix recently reached a set-top box deal in the UK with Virgin. In that arrangement, Netflix retained customer billing services, which makes sense since Netflix customers are not bound to any particular device or broadband/wireless carrier.