Netflix is in talks to add its application to the set-top boxes of U.S. cable-TV operators, letting customers search for web-based movies and television shows alongside traditional programs, according to three people familiar with the matter.
The largest subscription-streaming service has had discussions with providers including Comcast and Time Warner Cable, according to the people, who asked not to be named because the talks are private. Negotiations are furthest along with regional providers and smaller cable operators that use TiVo set-top boxes, one person said. The earliest announcements are weeks to months away, that person said.
The talks suggest cable operators increasingly see Netflix's $7.99 monthly service as a tool to attract and retain customers, rather than a threat that will lead to cord-cutting. Integration with cable service would let viewers find and watch shows without switching inputs, and may help cable operators promote their own on-demand offerings, the people said.
Newer set-top boxes blend internet-based programming with traditional pay television, a development that can fuel expansion if Netflix reaches accords with cable providers.
The company, with 35.6 million paying subscribers globally as of June, has signed two European cable systems after relying on game consoles, Blu-ray players, smartphones and web-TV devices such as Roku for growth.
"We would love to reduce the friction to the end consumer, and to be available via the existing device in the home, which is the set-top box," Netflix Chief Financial Officer David Wells said in late September. U.S. cable operators have had an "open offer" to add Netflix for two years, he said.
The Wall Street Journal reported Netflix discussions with Comcast and Suddenlink Communications, a cable-TV provider in 16 states, on Sunday.
A Netflix spokesman, declined to comment on the talks, as did representatives at Comcast and Time Warner Cable. A spokesman for Suddenlink, the seventh-largest U.S. cable operator, didn't respond to a request for comment.
Virgin Media, a U.K.-based unit of Liberty Media, and Sweden's Com Hem recently announced they would offer Netflix as part of their rollout of TiVo set-top boxes in Europe. Under those deals, people still would have to sign up for the streaming service, and Netflix would control its own billing.
"Our partners are interested in delivering Netflix to their subscribers," Steve Wymer, a TiVo spokesman, said earlier this month. "We stand ready to replicate our well-received offerings with Virgin and Com Hem with any partner or future partner."
TiVo this summer began shipping new set-top boxes with faster processors that let users load Netflix's service more quickly. Atlantic Broadband Finance, owned by Montreal-based Cogeco Cable, is the first U.S. provider to deploy TiVo's most advanced set-top box, called Roamio, Mr. Wymer said in an e-mail. Older installed boxes may be upgraded to handle Netflix late this year or early in the first quarter, he said.
Netflix has more than tripled this year, making it the second-best performing stock in the Standard & Poor's 500 stock index, behind Best Buy Co.
~ Bloomberg News ~