[opendtv] Netflix may find truce with cable carriers

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Mon, 14 Oct 2013 14:17:18 -0400


Existing cable STBs typically do not include a DOCSIS modem or support WiFi. 

What would happen if cable companies allowed third party devices to attach to 
their networks as I suggested last week?

How about a box that replaces the Docsis Modem, Cable STB, WiFi router, and 
runs Apps (including games)?

Add a hard drive and you get a DVR and the ability to back up your PCs and 
mobile devices.

And then there's the market for third party home automation and security 

Thinking "outside the set-top box."



Oct. 14, 2013, 1:36 p.m. EDT
Netflix may find truce with cable carriers
Analyst: Deal would be good for Netflix and firms like Comcast

By Rex Crum, MarketWatch 

SAN FRANCISCO (MarketWatch) — Netflix Inc. may be on the verge of making a 
truce of sorts with some of the largest cable companies in the U.S. that could 
re-shape the landscape for how people watch streaming-video services.

Netflix shares jumped Monday on news that the company may secure a deal with 
U.S. cable carriers like Comcast.

The possibility turned that way on Monday, with the Wall Street Journal 
reporting that Netflix is talking to several cable and pay-TV service providers 
— including Comcast Corp., the largest cable company in the U.S. — about making 
the Netflix streaming service available on their set-top boxes, via the Netflix 

Netflix shares rallied on the report, jumping nearly 6% to reach $318.37 by 
early Monday afternoon. The stock has more than tripled since the start of the 

“[It’s] great for Netflix if they can get it done,” Laura Martin of Needham & 
Co. told MarketWatch. “It would be a service added to the bundle, and good for 
the cable industry if they can get economics from Netflix to use their 
high-speed wires into the home.”

Currently, Netflix has almost 30 million streaming subscribers in the U.S. who 
pay $7.99 a month to access the company’s offerings. Netflix will give an 
update on its subscriber base during its third-quarter report, scheduled for 
Oct. 21. A Netflix spokesman wouldn’t comment about any talks the company is 
having with Comcast, Suddenlink Communications or other pay-TV service 

Netflix subscribers already use the company’s apps to watch shows on their 
tablets, smartphones and even on their computer screens. But they currently 
need an additional box, such as a Roku or an Apple TV, or a connected 
television to watch the service on their TVs.

However, as of now, no U.S. cable companies offer direct access to Netflix 
through their set-top boxes. The cable and satellite-TV providers have chosen 
to emphasize their own on-demand offerings, or in the case of Comcast, its 
Streampix option, which the cable company touts as a rival to Netflix.

But a move by Netflix in September that will bring the company’s service onto 
Virgin Media’s TiVo set-top boxes in the United Kingdom appears to have opened 
the doors a little to the possibility that Netflix could end up being offered 
as an option to the multitude of viewing selections from U.S. cable companies.

Martin is one of the latest analysts to get behind the Netflix proposition, as 
last Thursday she initiated her coverage of the company with a buy rating and a 
$425-a-share price target. Martin said that one of the many things in Netflix’s 
favor is that its “strategic position gives it negotiating credibility and 
leverage with talent, content owners, and potential distributors.”

One of the impediments to Netflix making deals to be carried directly by cable 
companies has been the concept of “net neutrality”, which argues that Internet 
service providers such as cable companies should treat all data carried on the 
Internet the same, and be paid the same amount by users or content providers 
regardless of the source of the data.

Netflix currently doesn’t pay for the bandwidth its users devour, even though 
Martin says the company’s service has been responsible for as much as one-third 
of the Internet data delivered at certain times of the day. And such heavy 
traffic is seen by ISPs as a burden on their overall ability to service all 
their Internet customers.

Because of net neutrality, Martin said cable providers might need to bring 
Netflix into their universe, and assess a carriage fee similar to how they 
charge cable channels to be carried over their systems.

“It may be the only way for cable guys to get paid for all the Netflix usage,” 
Martin said.

On Monday, Netflix released its ISP Speed Index data for September, which 
showed Google Fiber as providing the best and fastest streaming of Netflix’s 

Rex Crum is a reporter for MarketWatch in San Francisco. Follow him on 
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