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Cable Technology Feature Article

April 25, 2014

Netflix and Cable Providers: The New Power Couple

By Alisen Downey, TMCnet Web Editor

While it has been a talking point for quite a while now, it looks like our TV show binge-watching habits may have reached a new level enablement: Netflix will soon be available as a TV channel. The deal between Netflix and cable providers Atlantic Broadband, Grande Communications and RCN (News - Alert) was just announced, and buzz is already generating. Customers of these providers—with subscriptions to Netflix, of course—will be able to watch Netflix through their existing TiVo (News - Alert) set-top boxes using the Netflix App at no additional charge, save for the regular TiVo fees. The app could be available as early as April 28.

So it looks like Netflix, TiVo, and cable providers are all working together at last. But what will this mean for Netflix, and its users, in the near future? It has already been reported that the company’s DVD-by-mail service days are numbered, in favor of cloud and streaming technologies—which this integration deal with TiVo certainly underscores. As an avid Netflix user myself, I can only hope this means that all of those “Available on DVD only” titles will soon be added to the mammoth database of Netflix streaming options, and that they won’t simply fade into the ether—or more likely end up in landfills and sold en masse to resellers.

Perhaps the need to virtualize all of its collections is one reason why Netflix is reportedly planning to raise subscription fees from $7.99 per month to $8.99 or $9.99 per month… although funding more high quality original content like the award-winning “House of Cards” is certainly a good reason for wanting to pull in more cash.

Image via Shutterstock

The online streaming service continues to show increased earnings: in its Q1 sales for the year, profit and subscriber growth beat analysts’ forecasts, with 48.4 million streaming subscribers and a net income that jumped to $53.1 million (86 cents per share)—up from $2.7 million (5 cents) last year. While analysts expected a decent increase of 81 cents per share in the first quarter, Netflix exceeded this, and revenue went up 24 percent to $1.27 billion, matching projections. In other words, it’s great to be Netflix right now.

One question this all raises, however, is what will happen to all of the alternatives for streaming Netflix if TiVo becomes the main conduit of Netflix-as-a-TV-channel? The Roku is a great little device for streaming Netflix, Hulu (News - Alert) and more onto a TV; Chromecast is a handy dongle; and gamers can stream all kinds of content through apps on their consoles. For users that fall under the “cord cutting” banner, these options still make a lot of sense. But there are plenty of people in the U.S. who still prefer to hang onto their cable subscriptions. Often these are bundled with competitively high-speed Internet services, and for streaming purposes, this comes as an added bonus to TiVo users planning to watch Netflix as a channel.

Tom Rogers (News - Alert), TiVo's president and CEO, feels that TiVo is in a pivotal position in this time of shifting TV tides. “TiVo is the common technological thread bridging the gap for the first time here in the U.S. between operators and [over-the-top] services to help them deliver a superior and more complete offering to their subscribers,” he explained in a statement announcing the Netflix deal. “We couldn't be happier to have blazed this trail by providing the first cable operator implementations of Netflix with our European partners Virgin and Com Hem, and we are thrilled be part of today's game-changing announcement that this milestone will also occur in the U.S. We are highly confident that this combined offering will be extremely well-received by Atlantic Broadband, RCN and Grande subscribers alike."

Today, the real emphasis appears to be on the role of over-the-top entertainment as a service to work alongside with traditional services, rather than against them.

"The dynamics of this game-changing relationship are clear: more choices for the viewer via a simple, unified device," said Jim Holanda, CEO at RCN and Grande Communications (News - Alert). By bringing cable TV and popular services like Netflix together under the same roof, and through the same devices for users, is a powerfully convenient tactic that will likely pave the way for in-house entertainment as we know it in the coming years. 

Edited by Stefania Viscusi

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