Netflix Reportedly Meeting With Cable Companies As Amazon Eyes ...

Carl Franzen March 7, 2012, 12:43 PM

Netflix, the largest subscription streaming video service on the Web, is reportedly eyeing a much more conventional way of expanding its business: Cable TV.

Netflix CEO Reed Hastings has ?quietly met with some of the largest U.S. cable companies in recent weeks,? about a plan to offer Netflix as another ?on demand? cable package option, according to a Reuters exclusive on Wednesday.

As the Retuers report notes, the move would be a huge 180 for cable companies, which have traditionally viewed Netflix with skepticism and disdain, fearing that it would drive people away from cable.

But the major cable companies in the U.S. ? including Comcast, Time Warner and Verizon, among others ? also happen to be the country?s major Internet service providers, meaning that like it or not, they bear some responsibility in Netflix?s success.

As Reuters explains: ?Offering Netflix through a cable package could help the streaming service avoid a separate potential clash with cable operators over rising costs for online video traffic over their Internet pipes.?

Cable companies, too, are apparently recognizing that far from a threat, Netflix ? which traffics nominally in old TV shows and movies ? is actually a boon, as Netflix has to pay licensing fees to stream their content, another opportunity for re-monetization. Not to mention the fact that merely exposing more people to cable channels? content can help introduce new viewers to current shows and prep them for upcoming seasons.

Netflix has also openly recognized competition from new ?on the go? mobile streaming options from Time Warner?s HBO (?HBO GO?) and Showtime (?Showtime Anytime?).

Netflix, however, remains tight-lipped about any such conversations with cable providers, at least for the time being.

?We don?t have any comments on specific meetings that may or may not be held,? a Netflix spokesperson told TPM via phone.

Leading entertainment business analyst Michael Pachter, of Wedbush Securities, a longtime Netflix follower, told TPM that the rumors of Netflix aiming to become a cable offering were ?downright silly.?

?There is no way their current contracts envision distribution via cable,? Pachter wrote to TPM in an email. ?Their current deals are for streaming over the Internet, so they would have to negotiate separately for content.?

That said, the Netflix spokesperson did confirm that Netflix is meeting with ?multi system operators? (MSOs) ?all the time,? as well as ?other people in the industry.?

Netflix also referred back to CEO Hasting?s comments made last week regarding future business partnerships.

Speaking on Tuesday, Febuary 28 to investors at a Morgan Stanley conference in San Francisco, Netflix?s Hasings said that one day in the not-too-distant future, cable providers would offer Netflix.

?It?s not in the short term, but it?s in the natural direction for us in the long term,? said Hastings. ?Many (cable service providers) would like to have a competitor to HBO, and they would bid us off of HBO.?

?The key word there is ?long term?,? Netflix?s spokesperson told TPM.

Netflix has also previously sparred with HBO over owning exclusive rights to original content, namely David Fincher?s and Kevin Spacey?s upcoming political series ?House of Cards,? set to debut exclusively on Netflix later this year.

Speaking of original content, another Netflix competitor that the company has said has been moving up in its internal rear-view mirror, Amazon, is apparently closing-in on launching some sort of original content offerings of its own. Fortune on Wednesday caught an Amazon employee, Joe Lewis, updating his LinkedIn profile to say that his new job was ?Vice-President of Original Television at Amazon.? The profile remained with that job title for several hours and Fortune managed to get a quick screengrab before it was abruptly changed to read ?Vice-President, Production at Amazon Studios.?

The Fortune report coincides with earlier reporting from GigaOm on February 10 noting that Amazon had updated its jobs listings on its own website for positions at Amazon Studios that would include responsibilities such as ?develop series ideas? and ?supervise production,? among other duties that sound much like original video content creation.

?We don?t have anything to offer on this,? an Amazon spokesperson told TPM.

Netflix reported in its better-than-expected fourth quarter 2011 earnings report that it expected Amazon to launch a stand-alone streaming service to compete directly with Netflix sometime in 2012. Amazon currently offers video through its discounted annual shipping service, Amazon Prime, which costs $79 a year.

?Netflix leads a big growing market,? a Netflix spokesperson told TPM in response to questions about a potential competing Amazon service, ?Big growing markets attract competitors.?

Amazon, HBO, Netflix, Online Video, TV

Carl Franzen

Carl Franzen is TPM Idea Lab's tech reporter. He used to work for The Daily, AOL and The Atlantic Wire (though not simultaneously, thankfully). He's never met a button that didn't need to be pressed. He can be reached at carl@talkingpointsmemo.com.

Source: http://idealab.talkingpointsmemo.com/2012/03/netflix-reportedly-meeting-with-cable-companies-as-amazon-eyes-original-content.php

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