Comcast to Stream Netflix on Cable Set-Tops

Cable operator plans to integrate subscription-streaming service with X1 platform later in 2016

Courtesy of Netflix

Comcast and Netflix, which in past years have engaged in a public fight over bandwidth issues, have reached a deal that will make Netflix’s streaming-video service available to the cable giant’s X1 set-top platform later in 2016.

“Comcast and Netflix have reached an agreement to incorporate Netflix into X1, providing seamless access to the great content offered by both companies,” the companies said in a joint statement Tuesday. “We have much work to do before the service will be available to consumers later this year. We’ll provide more details at that time.”

For Netflix, the agreement is its biggest deal to date with a pay-TV operator to offer its service to cable or satellite customers. Netflix has a similar distribution deal with Dish Network for the satcaster’s Hopper DVRs, as well as the U.K.’s Virgin Media and several smaller U.S. cable operators.

The deal shows that whereas cable and satellite TV providers once viewed over-the-top services like Netflix as potentially mortal threats, pay-TV distributors are now more actively embracing the constellation of OTT offerings available in order to keep customers in the fold. Comcast’s motives in inking the pact with Netflix are also spurred by showing U.S. regulators that it’s able to be a friend — not a foe — to over-the-top video players; for example, Comcast is among providers opposing the FCC’s proposal to “open” set-tops boxes to let third-party manufacturers make boxes that incorporate pay-TV programming.

With the deal, Netflix will now essentially have the same status in Comcast’s TV lineup that other premium cable networks like HBO, Showtime and Starz have had for years.

The deal between Comcast and Netflix is a dramatic shift from the war of words the companies were engaged in less than two years ago, when they crossed swords over payments to guarantee network bandwidth for streaming video. “It is extortion when Comcast fails to provide its own customers the broadband speed they’ve paid for unless Netflix also pays a ransom,” Netflix said in September 2014. That came after Netflix earlier that year said it “reluctantly” reached a deal with Comcast to pay the cable operator for dedicated Internet bandwidth.

Netflix also actively lobbied against Comcast’s proposed takeover of Time Warner Cable. That deal would have given the No. 1 cable provider undue control over broadband and “more anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers,” Netflix execs said in 2014. At the time, Comcast had accused Netflix of seeking to shift delivery costs to all broadband users rather than just the streaming-video service’s customers. Comcast’s bid for TW Cable was later scuttled, and Charter Communications swooped into to acquire the operator (which was a deal Netflix supported, citing Charter’s pledge to not charge interconnection fees).

Netflix’s service has been available through several other pay-TV providers, including the U.K.’s Virgin Media and on several smaller U.S. cable operators including Altice Group’s Suddenlink Communications, through an integration with TiVo’s set-tops. Meanwhile, Hulu cut a deal with Cablevision Systems (now part of Altice after the French telecom company completed its acquisition of Cablevision last month) to make Hulu available as a channel to Optimum TV subs.

In May, Comcast said about 35% of its video subscribers have X1, and was adding about 40,000 subscribers per day to the platform. By the time the Rio 2016 Summer Olympic Games kicks off in August, the operator expects to have nearly 50% of video subs on X1, according to CEO Brian Roberts.