In what could be seen as either a Trojan horse for Netflix or as cable companies trying to co-opt one of their chief new-media rivals, Netflix is reportedly in talks with cable/internet providers to include its streaming video app on cable companies' next generation of set-top boxes.
First reported from anonymous sources "familiar with the matter" by the Wall Street Journal, the purported talks between Netflix Inc. and media companies like Comcast and Suddenlink Communications Inc. aim to integrate Netflix's subscription video service with pay-TV set-top boxes.
The deal, if successfully thrashed out, would be similar to the agreement made between the new-media streaming company and Virgin Media, Inc. in the United Kingdom.
If along the same lines as with Virgin Media, the partnership would not cost cable customers who want Netflix any less, as Netflix continued billing its existing customers using the Netflix app through Virgin's TiVo set-top box the same amount.
It does make it easier for Netflix customers to access the streaming service - and on one of its old-media rival's own device.
Currently in the U.S., if you want to stream Netflix on a TV, there is no shortage of device option. You can stream Netflix on a game system like Xbox 360 or PS3; you can use a streaming-specific set-top box like Roku or Apple TV, which cost $100 or cheaper; you can buy a $35 Chromecast, which launched offering 3 months of Netflix Instant Streaming for free; or you might already have the option embedded (albeit to varying levels of success) in your connected Blu-ray player or later-model HDTV.
But many cable subscribers may not have those devices. What they do have are cable boxes.
The benefit to cable companies is that they'd be able to bolster a selling point for their next generation set-top boxes: the internet-connected cable box as the all-in-one entertainment system. Offering one of the top TV-related apps on their new set-top devices would be key to the software ecosystem offered by say, Comcast's X1 Xfinity next-gen cable box.
In exchange for offering their app, though, Netflix reportedly wants cable companies to upgrade their internet networks with special servers designed to improve Netflix's streaming video quality and reliability, called "Open Connect."
Cable leaders like Time Warner Cable and Verizon have not exactly been receptive to the idea, as it would both bolster a rival service's quality (possibly at expense to their market share) and would also signify special treatment to a specific online service, opening the door for more companies to try to bargain for similar benefits. (Net neutrality fans should be concerned about this, even if they're fans of Netflix.)
The talks between Netflix and cable providers are purportedly in their early stages, and a possible deal is nowhere near being finalized. Cable companies may still be wary of making a deal with Netflix, viewing one agreement as a Trojan Horse for a cascade of moves the savvy video streaming service might make. However, cable companies are always receptive to something that might spur more data use on their networks, as tiered data pricing or "metered usage" becomes more common.