Netflix wants to become part of your cable bundle, but it won't be happening in the short term — that's the message from the company's CEO and co-founder Reed Hastings. At a Merrill Lynch event this week, the CEO said he sees his company as one of the players in the new cable landscape, alongside HBO and ESPN. Hastings said "the more we do original content, the more it's going to be natural to have Discovery, Netflix, Watch ESPN, Watch HBO — we're just another network."
The benefits are obvious: as a commenter in the audience pointed out, having a cable provider like Verizon FiOS add Netflix to its packages could help reduce Netflix's marketing expenses and churn. Customers would stand to gain too, with a (presumably) lower price than standalone Netflix service and the convenience of one bill. Cable and satellite distribution is going through some big hookups right now, with Dish buying Blockbuster for its online distribution, and the Verizon-Comcast deal changing the industry landscape, so the precedent is definitely there for a deal of this kind.
Later, the CEO dismissed a question about the financial pressure Netflix is putting on ISPs by taking up so much bandwidth. "Yeah, that 92-percent Comcast operating margin is really under a lot of pressure," Hastings said, adding, "what (ISPs) want is larger and larger applications like Netflix and Hulu to justify to the consumer why they should get a bigger, faster package."