Netflix is reportedly in discussions with major cable companies to carry the service natively via cable/satellite set-top boxes. This follows years of acrimony between the two camps -- the battle royale between Netflix's open OTT service (available to anyone via the Internet) vs. cable/satellite company IPTV solutions (limited to consumers within their physical footprints).
Much has been written about this turn-of-events. In fact, I was just quoted extensively this past week about the subject in the San Francisco Chronicle.
But, here are 5 reasons why it is a no-brainer for the major cable and satellite companies to carry Netflix as another "channel" available to their subscribers:
(1) Netflix Already Is Everywhere -- Netflix customers already can (and do) access their accounts everywhere and via multiple other access points, including their DVRs, DVD players, Xbox's, Apple TVs, and others of that ilk. That is the reality facing cable/satellite providers. So, why pretend it isn't there? In the words of Cablevision's CEO James Dolan, "if you don't ride the wave," you "get eaten by the wave." Why send your customers somewhere else to get what they want?
(2) Offer A More Compelling User Experience -- Piggybacking on the point above, bringing Netflix into the cable/satellite package can only enhance the customer's customer experience. While it ain't that hard for Netflix subscribers to access their accounts via other means, it certainly ain't seamless. It is another step -- and a step that is inconvenient for Netflix subscribers like me (I know I still fumble with multiple remotes to switch from my DirecTV to Netflix at home). Cable/satellite companies likely also will (or should) integrate Netflix into their customer billing, so that customers don't receive a separate Netflix monthly bill. That too increases the customer experience (via seamless, unified billing) Customer experience/satisfaction -- and cable NPS (net promoter scores) -- can only increase with the addition of this increasingly "must have" Netflix channel. With one remote, cable/satellite subscribers can select Netflix. That kind of convenience and ease-of-use matters.
(3) Offer A One-Stop Shop for All Compelling Content -- Netflix's original programming strategy is here to stay (House of Cards, Orange Is the New Black, Arrested Development are just the beginning). These shows are winning major entertainment kudos and, more importantly, attracting large audiences. Viewers increasingly want their Netflix. That is the reality. So, why not give cable company subscribers another reason to stay (and not cut the cord)? After all, Netflix doesn't have NFL Football and ESPN (you, cable/satellite, do!). So, tie it all together in one beautiful package for your customers! Don't think of Netflix as being competitive. Think of Netflix as being additive. Think of Netflix as being just another channel -- but, an increasingly critical one. Think of Netflix as being a marketing "win" and competitive advantage for you! Only you can offer all of the programming that "matters" in one easy-to-use package and seamless customer experience! (And, maybe Netflix will even pay YOU for the privilege of being offered on your platform, since you are expanding its subscription footprint!).
(4) Netflix Will Bring More Attention to Your Own Original Programming -- Since more cable/satellite companies will stay (and not cut the cord) with the addition of Netflix as another channel, that means that more viewers will watch original programming by the cable/satellite companies themselves (like "Rogue" on DirecTV). The more viewers watching your content, the more valuable it is. And, just like Netflix original programming, more subscribers will stay to watch it (so long as it is compelling). And, don't forget, you may be able to monetize that original programming in other ways by licensing to other territories -- and, how about this, back to Netflix itself (that's right, if the shows are good, Netflix will want them and pay for them!).
(5) Give Another Important Reason for Customers to Opt for Faster Broadband -- Consumers always want better video quality. That thirst never ends. And, guess who offers the pipes to enable that quality? That's right cable companies, you do! So, by bundling Netflix into your overall package of services, you are giving your customers yet another reason to upgrade to premium broadband packages. And, guess what? That's right, your margins are significantly higher in the broadband game than they are in the content packaging game (due to the high licensing costs associated with offering that content). So, perhaps your so-called "dumb pipes" aren't so dumb after all.
Smart. Very smart.
Voila! Q.E.D. Res ipsa loquitur... just look those up...
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