Bloomberg News

Netflix Seeks Presence on U.S. Cable Systems to Spur Growth (1)

September 26, 2013

Netflix Inc. (NFLX:US), the world’s largest subscription-streaming service, wants to attract more customers by adding its Web-based movies and television shows to U.S. cable systems, Chief Financial Officer David Wells said.

U.S. cable operators have had an “open offer” to add Netflix for two years, Wells said yesterday in an interview at the Goldman Sachs Communacopia Conference in New York. The company is still willing to forge partnerships, he said.

“We would love to reduce the friction to the end consumer, and to be available via the existing device in the home, which is the set-top box,” Wells said from the stage.

Newer set-top boxes blend Internet-based programming with traditional pay television, a development that can fuel expansion if Netflix reaches accords with cable providers. The company, with 35.6 million paying subscribers globally as of June, has signed two European cable systems after relying on game consoles, Blu-ray players, smartphones and Web-TV devices like Roku for growth.

Netflix, based in Los Gatos, California, reached a deal with Virgin Media in the U.K. this month, and said yesterday it will become available in December on Com Hem AB, Sweden’s biggest cable-TV system with 606,000 video customers. Netflix has a goal of 60 million to 90 million subscribers, Wells said.

Cable operators have to decide whether they view Netflix as a competitor or potentially complementary, Wells said. Pay-TV services have struggled to adapt to a shift by viewers to watching watching more shows on laptops, tablets and smartphones.

Web Boxes

With Virgin Media and Com Hem, Netflix will be included as an app on TiVo Inc. (TIVO:US) digital video recorders. Newer set-top boxes are capable of loading Web-based content more quickly, and combining Web-delivered programming with regular TV guides.

In the U.S., Comcast Corp. (CMCSA:US), the largest U.S. cable provider, has begun replacing its boxes with the X1, a DVR that delivers information from servers in the so-called cloud.

Netflix rose 2 percent to $313.13 at 1:02 p.m. New York time. The shares have more than tripled this year, to lead the S&P 500 Index. (SPX) Tivo, based in San Jose, California, fell 1.3 percent to $12.43.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • NFLX
    (Netflix Inc)
    • $368.14 USD
    • 5.04
    • 1.37%
  • TIVO
    (TiVo Inc)
    • $12.89 USD
    • 0.02
    • 0.16%
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