What Netflix is after with cable deals is a mystery

Netflix is talking to cable companies about joining forces but nobody seems to know exactly how this would help Netflix or cable companies.

Rumors are zinging around tech blogs and media companies about why Netflix might be pursuing partnerships with cable companies.

Netflix CEO Reed Hastings has said that the company will be more like a cable operator. Too bad. CBS 60 Minutes

Some of the theories are that Netflix needs help adding subscribers; or that Netflix wants to become the Internet service for the cable providers that don't have any online presence; or that it wants to become a cable station; or maybe it wants to join forces in the hopes of obtaining lower streaming rates from cable companies.

A Netflix spokesman declined to comment.

What we do know is that Netflix CEO Reed Hastings is talking to cable companies about a partnership, but exactly what the video rental company is pitching isn't clear. One report says that whatever it is, Comcast turned it down.

Comcast recently launched Xfinity Streampix, an upgrade to its Internet distribution so that it doesn't need Netflix. The other heavyweights that operate their own Web-video services or are working on them include Verizon and Dish. These companies are thought by some to be unlikely candidates to embrace Netflix.

Indeed, there are plenty of other reasons why Netflix might find the going tough. Its Web-streaming content isn't all that compelling now. The company has made a foray into original programming with shows such as "Lilyhammer," starring Steven van Zandt from the "Sopranos," and "House of Cards" but the rest of the lineup is mostly dated catalog titles.

The cable stations complained loudly to Starz, the premium TV service, after it licensed shows and movies to Netflix three years ago. How would it look for them now to hop in bed with the company? Let's also not overlook the obvious. No matter what Netflix says about not being a motivation for cord cutting, Netflix is still a competitor. Why would they want to help the company in any way?

Another potential hurdle could be Netflix's existing licensing agreements. The company would likely have to go back to retool those deals to allow it to distribute for cable.

Finally, all this talk about Netflix becoming just another cable company should come as a disappointment to users as well as investors. Why would I care about Netflix on cable? Many of the titles Netflix offers via Internet streaming can be found there already. If some kind of deal is worked out through which Netflix delivers some of the shows and films licensed to the cable station as well, I would still have to pay the $100 or more month fees to get cable.

Netflix's most attractive aspects are its convenience and price. The streaming service gave me instant access to on-demand video and did so for $8 per month. If the hope that Netflix could help me lower my video entertainment costs was naïve, it was Netflix that helped me get there.

Execs there said content acquisition was supposed to be as easy as writing big-enough checks to the studios. But take a look at Netflix's streaming selection. It hasn't proven to be that easy.

And if you're an investor and Netflix is just TBS or AMC, then it becomes harder to justify a lofty stock price.

 

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