After CEO Reed Hastings recently hinted at the possibility of Netflix’s Watch Instantly service coming bundled with cable services, Reuters is reporting the company has met with “some of the largest US cable companies” to discuss partnerships. The report goes on to mention it could stream through cable set-top boxes and appear as another line item on customer’s bills, however for that, Netflix would have to rework content licensing agreements that bar its service from cable boxes, which has kept it off of TiVo Premieres offered by companies like Suddenlink and RCN. We’ve also spoken to the infamous people with knowledge of the discussions and are hearing that while deals are being discussed, what’s initiated the talks is the increasing bandwidth load that Watch Instantly is placing on networks — see the Comcast vs. Level 3 dustup from 2010.
What the deals being discussed could bring is a setup where your cable company offers bundled services (TV, internet, etc.) that include premium access to Netflix — higher quality audio and video streams that don’t count against bandwidth caps, and maybe even a discount from the standard rate. Cable companies could obtain revenue from Netflix under the deal, and also keep customers around thanks to the advantages of the bundled offerings, while Netflix could have more reliable distribution for its video, and a leg up on competition from Amazon and Redbox / Verizon FiOS. We’ll wait and see what happens, but in an interesting twist, Netflix could quickly join sports as a tool for providers to keep customers from cutting the cord, instead of a reason for it.