Advertisement
Blogs
Advertisement

Technology is the impetus for a Comcast-Netflix deal

Wed, 10/30/2013 - 12:04pm
Brian Santo

Comcast is absolutely ready to cut a deal to get Netflix on its set-tops. On one condition. Maybe two.

There is no shortage of speculation about whether Comcast doing a deal with Netflix makes business sense – some say yes, some say no – but there are few evaluations of whether a Comcast-Netflix deal makes technological sense, which is key to why a Comcast-Netflix agreement is far more likely than not.

Comcast introduced Streampix, a Netflix-like streaming service more than a year ago. Like almost every other streaming service, it’s delivered via Wi-Fi. Streampix was widely interpreted as a countermeasure that Comcast adopted against Netflix, and to some extent, it is.

Free to higher-tier Comcast subscribers, and $4.99 a month for everyone else, Streampix is less expensive than Netflix. On the other hand, Streampix has a comparatively limited library. All in all, it serves more as a retention bonus for existing subscribers.

Comcast subscribers can download the app to various devices, including Apple iOS and Android mobile products. They can also get the app on their advanced set-tops – those equipped with a Wi-Fi receiver – and play Streampix on their TVs.

And that’s the key to why Comcast might not only want but maybe even need Netflix.

Comcast can get Streampix to their higher-tier customers with advanced set-tops. But the vast majority of their subscribers have legacy set-tops – slow, memory-challenged beasts with no inherent Wi-Fi connectivity.

These are the subscribers that are more apt to get a service tier with fewer channels, and are just as apt, if not more so, to supplement their cable TV service with over the top (OTT) services, including Netflix, Hulu and Hulu Plus, Vudu, Amazon Instant, and others.

One estimate puts the number of Comcast subscribers with legacy boxes at about 15 million. That’s a huge pool of subscribers who want a better on-demand experience than they can get right now. If getting Streampix to those subscribers was easy, Comcast would have already done it.

This is where Netflix comes in. Comcast can serve those legacy-box subscribers by helping to deliver Netflix. It just needs to figure out a way to do it. Or, more likely, it would hire one out of the small pool of vendors with experience serving dumb boxes from the cloud to do it for them.

If that vendor can successfully equip those boxes with a cheap Wi-Fi sidecar (or, perhaps better, a dongle), and get Netflix to those 15 million subscribers, Comcast would have to seriously consider a deal with Netflix.

It would not be an absolute imperative – there is no guarantee the two will be able sort out a mutually agreeable business arrangement, but Comcast would certainly have a very compelling reason to cut that deal.

Comcast was contacted for comment on this, but has not yet responded.

In the company's conference call this morning, Comcast Cable president Neil Smit said of a possible Netflix deal, "really there’s nothing to report. It’s been, frankly, incredible to me the amount of press coverage this has received. Our customers can receive Netflix in a number of ways, so it’s not really a high priority for us. We’re open to putting apps on our X1 platform. We have, for example, Facebook and Pandora there now. But at this point, we don’t really have anything to report on the Netflix front."

Advertisement

Share This Story

X
You may login with either your assigned username or your e-mail address.
The password field is case sensitive.
Loading