Netflix May Come To Cable Set-Top Boxes

Cable TV subscribers may soon have an additional choice when it comes to on-demand movies and shows.  Netflix is in talks with several U.S. pay-television providers including Comcast and Suddenlink Communications to make its online video service available as an app on their set-top boxes, the Wall Street Journal reported.

The move comes following a similar agreement Netflix made with U.K. cable operator Virgin Media and would mark the online video service’s first such deal with a U.S. cable provider.

The deal also marks an unorthodox marriage of sorts between cable TV providers and Netflix who have battled to be the go-to place for viewers to find on-demand TV programming.  Netflix has won over consumers who are fed up with costly cable bills and cable companies are struggling to stay relevant in an increasingly competitive marketplace.

While a deal between the two is good news for cable subscribers, it is not such good news for makers of gaming consoles and streaming media players such as Apple TV and Roku, which have relied in part on Netflix to sell their devices.  However, in order for cable subscribers to currently access Netflix, they have to switch to a separate media player.  The deals they are discussing now would make it possible for cable-TV subscribers to access the Netflix app through newer set-top boxes being deployed.

But don’t toss out your Roku quite yet.  A snag in the talks with at least two operators is that Netflix is insisting that they also take on its special technology, which is part of its Open Connect program, designed to improve the delivery of its streaming video, the paper reported.  Netflix believes the technology, which consists of special servers connecting directly into broadband providers’ networks, is critical to make sure its service provides the best quality to viewers, the paper reported.

The advanced technology that Netflix is pushing has already been rejected by Internet providers Comcast, Time Warner Cable, AT&T and Verizon Communications over concerns that such an arrangement could lead other online services to ask for special treatment, the paper reported.  The providers say they don’t need the special technology arguing that their broadband networks are fully capable of handling Netflix traffic, the paper said.

Other issues with the deal include concerns that Netflix could start eventually use the app as a “Trojan Horse” to sell pay-per-view movies or other services that compete directly with the operator’s video offerings, the paper reported.

But with younger generations of TV viewers increasingly shunning cable for less expensive streaming devices, its obvious that cable operators need to begin embracing the Internet in order to stay relevant.   According to researcher IHS, 2013 is on pace to be the first year ever that total U.S. pay-TV subscriptions will decline, falling to 100.8 million from 100.9 million last year.

DirecTV and Verizon’s FiOS have already connected their newest boxes to the Internet, allowing users to access apps such as YouTube.  Time Warner Cable and Cox Communications have also talked to YouTube about carrying its app on their set-top boxes, the paper reported, but neither has a deal with Netflix.

If Comcast and Suddenlink make a deal with Netflix, it may be enough for other U.S. pay-television providers to follow suit.

What do you think?  If cable offers Netflix, would you subscribe?