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SALT LAKE CITY -- A report from Reuters suggests that Netflix Chief Executive Reed Hastings has been involved in discussions with some of the largest cable companies in the United States, which may lead to Netflix being offered as a premium cable service in addition to its online movie streaming functions.
While this is still informed speculation, many people familiar with the situation have said that Hastings has already met with senior executives at several cable companies to iron out the details of such a partnership. According to one source, at least one cable operator might conduct a beta phase offering by the end of the year.
Various sources have come forward offering details about the possible merger of content. The agreement could lead to Netflix becoming an on-demand option for cable subscribers, which would serve as competition to existing subscription services such as HBO. Another possibility includes Netflix being offered as an additional option on a subscriber's bill, according to one source.
In addressing the speculation, Hastings brought up the inherent advantages that both Netflix and major cable companies could see in such a merger.
"It's not in the short term, but it's in the natural direction for us in the long term," Hastings said at an investor conference last week. "Many (cable service providers) would like to have a competitor to HBO, and they would bid us off of HBO."
While Netflix has seen its share of success as a provider of streaming online video and DVD rentals, its most recent debacle came in the form of Qwikster, its attempt at splitting the two services. This collaboration could act as a remedy to the subscription loss Netflix experience as a result of the negative reaction to Qwikster -- which was quickly discarded after the fact.
Cooperation with cable companies could also serve as a truce, of sorts, between the two services. Typically, major cable companies such as Comcast and Time Warner are also major internet providers, and allowing their customers to subscribe to Netflix through their set top box would drastically reduce bandwidth costs, as opposed to customers streaming the service through their home computers.
