Comcast and Netflix have made a deal to let the former’s users get Netflix on their X1 set top box
Netflix Inc. (NASDAQ:NFLX) and Comcast Corporation (NASDAQ:CMCSA) have had their issues in the past but it seems that both have buried the hatchet. In a deal that allows Netflix to be accessed through the set top box, X1, Comcast and Netflix have partnered up; now, the largest cable company by revenue offers the most acclaimed and popular web streaming service making original content today. You can just smell the money.
Comcast already offers over 85000 TV shows and movies via Xfinity on demand as well as hundreds of channels. And the X1 set top box was in the hands of 22 million consumer homes by the end of 2015 (USA Today). Combine that with binge worthy shows like Orange is the new Black, The Unbreakable Kimmy Schmidt, House of Cards and my absolute favourite, Marvel’s Daredevil as well as 46 million US subscribers and you’ve got a recipe for success. It’ll not only make binging easier but put Netflix in the hands of all those consumers who just couldn’t be bothered to make an online account.
The financials of the deal are still hush hush, as neither company would comment on who would handle the billings or what bounty might be paid, but there are a few things we know, thanks to a report by Morgan Stanley. First of all, Comcast would get a big chunk due to its large subscriber base and Netflix would have a deal with it similar to the ones it has with cable operators around the globe. Chances are that Netflix would have to give up some financials like it does to Apple and TiVo but there is no sign that profits would be impacted in the long run towards the company. And of course, the deal will give both companies a competitive advantage over other services like Verizon, Dish and Roku.
Netflix and Comcast have had their problems in the past so you can be sure there are safeguards to ensure that none of that ever happens again. In 2010, Comcast launched a competitor to Netflix’s DVD rental business that set off the first spark. Then again, Netflix had accused Comcast of violating net neutrality by favoring its own video services over the former as well as Hulu and HBO Now in 2012. They had another scuffle in 2014 when they struck a deal to clear the bottleneck for broadband customers and both companies said they regretted the deal. And it was clear why all this was happening. People love Netflix. It is the self-proclaimed future of entertainment. And this doesn’t go down well with competitors specially when it turns out to be a prophecy that’s actually coming true.
In the long run, cable companies will fizzle out and online streaming services will become the norm but for now, they’ve slowed down the speeding train enough to try to get off the tracks. Netflix’s shares rose 1.3% to $97.91 on Tuesday when the deal was announced.