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April 25, 2014

Netflix cracks cable market in deals with 3 providers

SAN FRANCISCO — Netflix Inc. has signed deals with three U.S. pay-TV operators, putting the video-streaming service on an equal footing with traditional cable networks like HBO for the first time in the domestic market.

The three small operators, RCN Telecom Services, Atlantic Broadband and Grande Communications, will offer Netflix on living-room TVs through set-top boxes made by TiVo Inc., according to statements from the companies Thursday.

While the three total fewer than 1 million customers, the deals mark a big step in efforts by Netflix Chief Executive Officer Reed Hastings to simplify access to his service. With TiVo, consumers will be able to sign up for Netflix and search for shows without toggling between inputs on their TVs. Los Gatos, Calif.-based Netflix has similar deals in Europe.

"What we're doing is really a watershed moment for the industry," said David Isenberg, Atlantic Broadband's chief marketing and strategy officer. "This partnership with Netflix really signals the beginning of the broadband TV era."

Financial terms weren't disclosed. In the past, Netflix has agreed to pay set-top box makers and others certain fees when subscribers sign up through their equipment.

Netflix has discussed partnerships with Comcast Corp., the biggest cable company, and other providers that don't offer TiVo boxes to their customers. Hastings said this week those talks are continuing.

San Jose, Calif.-based TiVo began shipping new set-top boxes in recent months with faster processors that let users load the Netflix service more quickly. Atlantic Broadband, owned by Montreal-based Cogeco Cable Inc., was the first U.S. provider to deploy the most advanced box, called Roamio.

"Our view has long been that the marriage of linear television and streaming over-the-top TV is the future of television, and Netflix has clearly emerged as a must-have over- the-top service," TiVo President and CEO Tom Rogers said in an e-mailed statement.

Sweden's Com Hem and Virgin Media, a British-based unit of Liberty Media, began offering Netflix last year as part of their rollout of TiVo set-top boxes in Europe. Under those deals, people still would have to sign up for the streaming service, and Netflix would control its own billing.

Cable companies are beginning to embrace Netflix as an adjunct to their live TV and on-demand services. The subscription service's library of past seasons of television shows complements cable's lineup, Isenberg said.

Until recently, Netflix couldn't offer its service through cable set-top box providers because it hadn't obtained rights from content owners. The three cable providers say that, with those now secure, they will promote Netflix by adding a dedicated channel on their program guides to access the service.

 "This is all part of continuing to improve and enrich our customers' viewing experience," said Jim Holanda, CEO at RCN and Grande Communications.

Customers of Atlantic Broadband, Grande or RCN who want Netflix under the new arrangement will pay separately for the service, in addition to their usual cable package.

The companies provide TV services in the eastern United States, Chicago and Texas.



 

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