Netflix-Comcast Deal: A Marriage Of Convenience

by , Staff Writer @pjbtweet, July 6, 2016

The news that Netflix will soon be offered on Comcast’s X1 set-top box is good business for both. If this works out like it might, it could change the way consumers access over-the-top content. Conversely, the deal might cause angst at Roku, Apple and Amazon.

Netflix-Comcast Deal: A Marriage Of Convenience

The trouble with those services is getting there.

If you’re watching at home–and that’s the way most viewers choose to watch Netflix–you have to platform over to those other providers if you subscribe to them. It’s not a hassle in the big scheme of things, but it’s not absolutely convenient. Getting Netflix via the same device that gives you every other channel you want is a lure for consumers.

“Switching devices is a major irritant to consumers,” says Mike Goodman, director of digital media strategies for Strategy Analytics, who also ponders another possible opposite-of-irritating sweet spot. “Will Netflix’s library be integrated into the Comcast search function?” he asks.

That would be a major ease-of-use addition.

This deal, first reported by Recode, is not without irony. Netflix fought the proposed Comcast-Time Warner merger raising net neutrality fears about how Comcast could use its broadband power to slow transmission of competitors’ streams.

Content is king. But convenience counts, too. If Netflix becomes, essentially, “another channel on the dial,” as Goodman calls it, that familiarity will certainly breed subscribers. Those are becoming harder for Netflix to find domestically.

But a cable deal offers tantalizing opportunities, like a special deal on Netflix, or Netflix and HBO, for new X1 subscribers. (Presumably, Comcast would also handle billing, which, all things considered, seems to be a negative. Cable billing lumps together what you want–and what you don’t–into one usually disagreeable price tag.)

And what about Roku, Apple and Amazon?

It seems to me that Netflix is a little like the anchor department store in a mall. Consumers might like the other outlets for special shows, but it’s the presence of Netflix that encourages them to buy a Roku, Amazon or Apple box.

What happens when Comcast has its own Macy’s outlet? Doesn’t Hulu have to increase its efforts to find cable access just to stay in the game?

“You’re going to see a lot more deals like this,” Goodman says, noting that Comcast also offers a white label version of its X1 to other cable operators. Cox has begun offering it under the Contour brand name. Netflix and Hulu already have cable access deals with a few smaller operators.

The outcome may be a happy convergence of set-top technology.

The FCC has been pushing to unlock the cable set-top market (off of which cable companies make a fortune in consumer rentals) so others can get in the game, offering the one box solution the Comcast-Netflix deal seems to promote. The end result might be the ultimate blurring of the lines, when cable and over-the-top blur completely into one program source–namely your cable provider.

“Yay, Comcast customers can now watch Netflix! Now what’s wrong with unlocking the box and letting consumers watch the rest of the Internet as well?” stated the advocacy group Consumer Video Choice Coalition. “Comcast once again proves consumer advocates’ point; consumers are hungry for new Internet streaming content and don’t want a gatekeeper box or gatekeeper app telling them what they can and can’t watch.”

It looks like they might get it, one way or the other.  

The next moves ultimately may belong to Amazon, Roku and Chromecast. Consumers must decide if a pricey one-stop cable subscription is more attractive than cheaper alternatives with fewer choices, but sometimes funkier offerings.

In large part because cable has been painted in villainous tones all these years, I don’t think that outcome is clear at this point. I’m still paying for dozens of Spanish-language and standard definition channels I don’t want. I’m not sure convenience will buy me off.

But I’m thinking.

pj@mediapost.com

 

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