The Comcast-Time Warner Cable Deal Is Already Creating Headaches For Netflix

02/18/2014 03:37 pm ET | Updated Feb 18, 2014

The warnings surfaced almost immediately after Comcast announced it wanted to buy Time Warner Cable. The $45.2 billion deal, some said, could be terrible for Netflix customers: The selection of movies and TV shows could get worse, Netflix performance could suffer on Comcast's expanded network, and customers could even see limits to how much they're able to stream.

It'll be some time before those scenarios take place, if they do at all -- the deal still must be approved by regulators. Netflix, however, has already started to feel its effects.

Negotiations between Time Warner Cable and Netflix that could have given the streaming service prime real estate on the cable company's set-top box have stopped, according to a Tuesday Bloomberg report.

Netflix on cable boxes is good for Netflix -- and, Netflix argues, for consumers -- because it makes it that much easier for people to watch Netflix on their TVs. Instead of futzing with video inputs to switch between normal TV and whatever device -- Roku, Apple TV, a game console or an Internet-connected Blu-ray player -- people would simply be able to get to the Netflix app via the menu on their cable box. This could make happier customers and, of course, help Netflix, which has over 30 million customers in the U.S., attract even more subscribers.

But cable companies and Netflix are frenemies of sorts. Cable companies, many of which also make money by selling subscriptions to pay TV, see Netflix as a competitor, drawing away valuable eyeballs from their own on-demand and TV services.

As The New York Times reported last fall, some cable companies -- especially those like Time Warner Cable, which fancies itself more of a provider of broadband access than one of pay TV -- may find giving customers easy access to Netflix is a selling point, as it could get subscribers to upgrade to more expensive Internet plans.

But Comcast is a different animal -- with ownership of NBCUniversal, it's much more than just a cable company, and it sees Netflix as more of a threat than other cable companies might. Comcast offers a $5 competing streaming service, called Xfinity StreamPix, and, as Bloomberg reports, also makes money from rentals and downloads from its X1 Internet-connected cable box. So it's in Comcast's best interest to keep people from using Netflix.

Comcast has already taken steps to do just that, the Los Angeles Times notes: The cable company's Streampix doesn't count against monthly data caps that Comcast has imposed in some markets, while Netflix and other streaming services do.

And over the past few months, Netflix has actually gotten slower on Comcast and Verizon networks, with customers reporting problems streaming movies and TV shows. Netflix accounts for huge amounts of data, and experts say that Verizon and Comcast's decisions not to upgrade their networks to keep up contributes to congestion and a poor Netflix experience. If Netflix isn't working well for you, but Comcast's streaming service is, then you may be more likely to use Comcast's.

YOU MAY LIKE

CONVERSATIONS