Comcast will let customers get Netflix on its set-top box

comcastCable giant Comcast will allow popular web video streaming service Netflix onto its X1 platform, the companies confirmed after being asked by Recode about talks to do so.

Said the pair in a statement: “Comcast and Netflix have reached an agreement to incorporate Netflix into X1, providing seamless access to the great content offered by both companies. We have much work to do before the service will be available to consumers later this year. We'll provide more details at that time.”

Sources said the deal to be on the cable giant’s set-top box would be akin to the arrangement that Netflix has cut with smaller cable operators in the United States and bigger ones across the globe. Basically, the Netflix app is present on the X1 platform, for users to sign into, making it easier than using other ways to do so.

Netflix also has deals with Apple, Roku and Google’s Chromecast, with its app offered on these Internet TV services. It also is embedded in smart televisions.

A recent report by Morgan Stanley, in fact, raised this possibility of a Comcast deal, especially noting that it could benefit by getting a larger bounty from Netflix for adding subscribers. It would also help Comcast have a more competitive video offering to others, like Roku, Verizon and Dish, that have apps from services like Hulu and Netflix.

Simply put, lots of people like Netflix, so why not just offer it easily to cable customers to keep them happy?

For Netflix, the addition of new subscribers would be a big benefit and it would also put them closer to a wider range of consumers.

In his June report, Morgan Stanley’s Benjamin Swinburne discussed some of the possible financial arrangements of such a deal: “We would expect Netflix to give up some economics, similar to other distribution partners like Apple or TiVo but we do not believe it would meaningfully alter the direction of Netflix profits over time. Payments to distribution partners are reported in marketing expenses on Netflix's consolidated financials.” He did note that Comcast’s pay-per-view business could be impacted, though not significantly.

Neither Comcast or Netflix would comment on what bounty might be paid or who would handle things like billing between them.

No matter the details, this move is an enormous step, given the long and sometimes contentious history between the two companies against a backdrop of increased consumer usage of internet-delivered video.

Back in 2012, for example, Peter Kafka reported that Netflix CEO Reed Hastings was “once again accusing Comcast of violating ‘net neutrality’ principles by favoring its own web video service over those from Netflix, HBO and Hulu, when it comes to data usage.”

In 2014, the pair struck a deal aimed at clearing the bottleneck of slowing the video service’s streams for the cable company’s broadband customers, although Hastings later expressed regret at having to forge it and Comcast also groused back.

Without going into all the details, let’s just say Comcast and Netflix have had some issues.

The deal also lets the cable giant show regulators that it is more open to competitors and that its X1 box is a web video platform and not just an old-time cable box with a better user interface. FCC head Tom Wheeler has proposed a rule that would require cable operators to open up their set-top boxes, which they have opposed, but sources at Comcast said this deal is unrelated.

More to come, obvi, since this is the biggest cable partner that Netflix now has in the important United States market and Comcast is now working closely with the Silicon Valley company that has been most persistent Internet critic.

Source: Recode