SAN FRANCISCO – Comcast is going to add Netflix to its X1 set-top boxes in the latest deal to blur the lines separating cable TV from Internet video services.
The arrangement announced Tuesday signals an apparent truce between two companies that have been antagonistic toward each other in recent years as they publicly bickered how much each side should pay for delivering Netflix’s video to the Comcast’s Internet subscribers.
Netflix also attacked Comcast’s proposed $45 billion takeover of Time Warner Cable last year as a bad deal for consumers before the sales agreement was cancelled in the face of regulatory opposition.
In a joint statement Tuesday, Comcast and Netflix said further details of their alliance will be released later this year when Netflix becomes available on X1 boxes.
It’s likely that Comcast, the nation’s largest cable-TV operator, will receive a cut of each new subscriber that signs up for Netflix’s service through the X1. Netflix charges $8 to $12 per month, depending on the type of plan selected.
“We have much work to do before the service will be available,” Comcast Corp. and Netflix Inc. said.
This won’t be the first time that Netflix will be available on cable-TV boxes, but it has the potential to significantly expand its reach at a time that its growth in the U.S. is slowing. Netflix already has 47 million U.S. subscribers, making it more difficult for the company to find new customers.
About 8 million of Comcast’s 22.4 million cable-TV subscribers already have X1 boxes and millions more are expected to be on the system by the end of this year.
Investors appeared to see some upside in the X1 deal as Netflix’s shares gained $1.24 to $97.91 while most of the stock market declined. Netflix’s stock has dropped by 14 per cent so far this year, partly because of its decelerating U.S. growth.
Comcast and other cable providers have long viewed Netflix as a competitive threat that encourages consumers to cancel their pay-TV subscriptions, or “cut the cord,” as they become more accustomed to getting their entertainment from Internet video.
But Comcast and most other cable providers also sell high-speed Internet services that are still growing, partly because so many people want to stream Netflix, YouTube, Hulu and other online video services into their homes. Comcast, for instance, now has nearly 24 million subscribers to its Internet service to eclipse the cable-TV side of its business.
Comcast also is embracing Netflix at a time when U.S. regulators are weighing new requirements that will require the TV industry to allow technology companies such as Google and Apple to sell cable boxes, too. Those boxes have become a major source of revenue for cable providers, generating more than $200 per year in leasing fees in the typical U.S. household.
If cable boxes are sold by technology companies, they will likely feature more Internet applications, stepping up the pressure on incumbent providers to adapt.
Comcast is already developing a cable-TV app that will work on Roku’s Internet video streaming boxes later this year.