Netflix, Inc. (NFLX) In Early Talks With Cable Providers

Netflix, Inc. (NASDAQ:NFLX)  is reportedly in talks with Comcast, Suddenlink Communications and various other service providers to offer its online streaming content service in the form of an app on service providers set top boxes, according to a report in The Wall Street Journal. Netflix’s negotiations with these service providers are currently in the starting phase, and no deal has been concluded yet.

Netflix, Inc. (NFLX) In Early Talks With Cable Providers

Last month, the online streaming service provider entered into a deal with U.K.’s Virgin Media, which will connect the streaming service of Netflix to Virgin’s service through TiVo set top boxes.

Netflix has been on the look out for such deals

Netflix has been looking forward to striking significant deals with U.S. pay TV providers. Netflix’s chief financial officer, David Wells said in a statement to Reuters that Netflix has proposed other U.S. cable operators add Netflix for two years.

These sort of deals, apart from giving Netflix more users, will give customers a number of devices through which they can stream Netflix content. Also, the cable companies will not have to overcome the stiff competition given to them by Netflix.

Possible issues, before a deal is concluded

However, if sources are to be believed then a lot of cable service providers are still on the fence about allowing a Netflix app on their set-top boxes. The possibilities are high that Netflix, Inc. (NASDAQ:NFLX) may come up with its own pay-TV subscription service, which may ultimately compete with what is provided by the cable operators.

Additionally, there are chances that pay TV subscribers may discontinue their cable subscriptions when they discover that almost all the shows are available on Netflix. If such a trend is noticed then there will be a high chance that cable TV will become obsolete, and subscribers will turn towards a Roku, or an Apple or any other Internet-connected set top box in place of cable subscription.

However, another point of view could be that giving Netflix service can actually increase the number of cable TV subscriptions.

Cable operators are required to enhance their streaming service through different technologies. These technologies are a part of the Open Connect program, which allows ISPs to directly connect to their network for free.

Netflix, Inc. (NASDAQ:NFLX) is looking forward to coming up with its own servers to get linked to the ISP network, which will play a significant role in improving the quality of programs. Cable providers, on the other hand, believe that granting this technology to Netflix will create issues in the future as streaming services will demand their own apps on the new set top boxes.