Netflix Seeks to Blur Lines with Cable Operators

The line between cable television and online digital rivals such as Netflix has blurred further recently, as Netflix is in talks with cable providers to make its service an application from cable set-top boxes. Marketers in the digital space should take pause with this development, as it may diversify the viewing audience away from the traditional demographic associated with Netflix in its current “online-only” form. While Netflix quietly partnered with Virgin Media in the UK for this arrangement—the first of its kind—talks in the US would represent a further commitment to this new business model.

This is an interesting proposal because Netflix and cable operators have traditionally been at odds with each other over customers, particularly in relation to the recent rising trend of “cord-cutters.” However, the new proposed relationship could make sense, as it would incent other users to try Netflix through their televisions, furthering its subscribing user-base, while allowing Netflix to co-exist with its cable operator rivals via incremental revenue to these operators.

Several major cable providers, including Comcast, Verizon, and Time Warner, have declined the arrangement in its present form. Since these are by far the largest operators in the US, Netflix will likely need to sweeten its offer or change the business model in order to appeal to these potential partners.

Digital marketers and advertisers could be affected by this development in a multitude of ways, as it may make the Netflix platform more ubiquitous across US households and further limit the amount of live television that is viewed. The breakdown of marketing budgets for video content would need to be changed to account for the gradual change in viewing habits relative to this development. For now, this deal appears stalled in its current form, but it warrants following over the next several months to gauge the traction Netflix is able to make.