[opendtv] Expect Time Warner/Comcast Cable to Offer Netflix - TheStreet
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 18 Feb 2014 10:13:36 -0500
http://www.thestreet.com/story/12390043/1/expect-time-warnercomcast-cable-to-offer-netflix.html?puc=TSMKTWATCH&cm_ven=TSMKTWATCH
I find some of Rocco's work very interesting, but I think he is way too
optimistic on this one...
Regards
Craig
Expect Time Warner/Comcast Cable to Offer Netflix
NEW YORK (TheStreet) -- A few months back, I ranted about a scoop I had ...
Despite the media gushing over "talks" that would lead to Netflix (NFLX)
becoming an a la carte cable option, I told you it wasn't going to happen. And,
in October, that was good information.
However, things have changed.
If regulators approve the Time Warner Cable (TWC)/Comcast (CMCSA) deal -- and I
don't consider this a slam dunk -- expect cable, big and small, to offer
Netflix.
In fact, I will go so far as to guarantee that if Netflix wants this to happen,
it will happen. For that matter, just about anybody else -- be it Hulu or
Amazon.com (AMZN) Instant Video -- will be able to receive the same treatment.
Here's why ... because why not?
The TWC/Comcast behemoth should, in theory, be good for consumers from a cost
standpoint. That's because the combined company has unprecedented pricing power
over the networks. The timing of existing contracts aside, this sets up a
scenario where TWC/Comcast can and will turn the screws on everybody.
Theoretically, this portends lower prices for consumers. Because TWC/Comcast
will control relationships with, say, Time Warner's (TWX) HBO and Disney's
(DIS) family of networks like never before. Even ESPN.
Gone are the days of Disney extorting cable with ... You want ESPN, you also
have to carry ESPNU and ESPN Yugoslavia III. They'll have to give in on the
number of throwaway networks TWC/Comcast carries and on the price they pay to
broadcast the ones viewers actually want.
In a perfect world, this brings your cable bill down. If TWC/Comcast can use
its size and scale to force HBO to take 50 cents or $1.00 less per subscriber
(or whatever, these are random, top of my head numbers), the consumer should
see that cost savings. But don't hold your breath. Entities such as cable
rarely lower prices.
However ... if the TWC/Comcast deal happens, I expect the company to position
itself as the one-stop shop for all forms of entertainment.
It will jettison the old cable packages and move closer, if not directly to the
a la carte model. This gives very few programmers privilege or a guaranteed
retransmission fee. You only see that cash if the cable customer picks you out
of the crowd.
That's where Netflix enters the picture in what will be true, though probably
not as well publicized as its past accomplishments disruption.
TWC/Comcast will position itself as the Best Buy (BBY) of cable. Anything you
want in the universe, we have it. Standalone. A la carte.
You want Netflix for $8.00 a month. No problem. Click this button, get all of
the information you need, including a tutorial for dummies on how to use
Netflix, buy it and we'll add the charge to your monthly bill.
Reed Hastings will be more than willing to give TWC/Comcast a sweet deal on
commission per signup. By doing so, Netflix collects additional subscribers
(like the older generation who requires an introduction to streaming via
something more familiar such as cable) and, maybe more importantly, contributes
to the sudden position of weakness HBO, ESPN and every other network, large and
small, operates from.
Because TWC/Comcast will be able to position its platform as one that, like
Best Buy, contains stores within stores. We have everything you want. We're
your one stop shop for everything. Every streaming video service that wants to
sign up. In. Internet radio services. You're in as well.
There's no need -- or at least there should not be a need -- for, say, Roku. Or
Apple (AAPL) TV.
All TWC/CMCSA needs to do is get every one of its customers' television sets
hooked up to the Internet in some way and they can immediately own that turf.
Box out Roku. Box out Apple. Box everybody out.
Because there's no reason cable can't offer what these companies offer. For
example, all Apple TV would have going for it is a lock on existing iTunes
content libraries.
The role of the delivery middleman comes to an end (or becomes less
viable/lucrative) if TWC/Comcast plays its cards right.
If this isn't their plan -- or they don't have something in mind that at least
resembles this -- they're nuts. I can't imagine TWC/Comcast would decide to get
together to watch their control over the market fade away due to inaction.
Because their market share will erode if they stand pat. Consumers are
skeptical of this deal to begin with. If they feel like they're getting screwed
as a result or not receiving the benefits of a brave new digital world, they'll
go elsewhere.
TWC/Comcast is in the position to sweeten the value proposition for the cable
customer now. I would be stunned if they drop the ball here.
They'll open their platform up to anybody that wants to be part of it. And, in
the process, they'll pay less to partner with the entities that provide that
content.
If anybody should be referring to big name networks as their "bitch" right now,
it's TWC/Comcast.
Approval of this deal absolutely ends the way business gets done between cable
companies and the networks. While cable subscribers might not see their prices
come down, they will receive -- or at least be told they're receiving -- the
ability to customize their packages and extract what looks like meaningful
value from a sea of an increased number of choices.
--Written by Rocco Pendola in Santa Monica, Calif.
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