Netflix's Path Into MSOs Becomes Clearer

The end of Netflix Inc. (Nasdaq: NFLX)'s deal with Starz Entertainment LLC on Thursday may get Netflix a step closer to offering its app on TiVo Inc. (Nasdaq: TIVO) boxes that are distributed by cable operators. (See Netflix, Starz on the Outs .)

The Starz deal was why RCN Corp. was unable to offer Netflix on TiVo boxes when the cable operator launched its TiVo offering in May 2010, RCN Senior Director of Video Product and Video Network Operations Jason Nealis tells Light Reading Cable. He says he's eager to reopen the dialogue with Netflix now that that Starz deal has expired.

Netflix, meanwhile, is showing some interest in partnering with cable as the company continues to develop original programming and look more and more like a premium programmer such as HBO. (See Netflix Plays Friendly With Cable.)

RCN, like other MSOs, offers TiVos outfitted with CableCARDs that deliver the operator's linear TV lineup and are integrated with its video-on-demand (VoD) service. (See RCN to Expand TiVo 'Premiere' Rollout and RCN Rolls TiVo's Whole-Home DVR .)

But Netflix has not been part of that because its contracts with some programmers prevent it from streaming content to TiVo devices leased to customers by RCN, Suddenlink Communications and other MSOs. Starz's cable VoD service and the one it was offering through Netflix, which also included access to a stream of Starz's flagship linear channel, apparently were not permitted to run concurrently on an MSO-supplied device. (See Suddenlink Blames Netflix Contracts .)

Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s integration with TiVo, which will soon get underway in San Francisco, won't be affected by such restrictions, because it's limited to TiVos sold at retail. (See Comcast Trial Fuses TiVo With VoD.)

Whether the Starz deal was the only one in Netflix's way is unknown. Netflix isn't commenting about its negotiations with content owners, or about whether it might be interested in creating an MSO-friendly app that only streams content that wouldn't violate Netflix's current distribution contracts.

Although some view Netflix as competitive to cable VoD, MSOs that lease out TiVos also have some good reasons to want Netflix in the package. For starters, it puts them on a par with the features and apps that grace TiVos sold at retail. MSOs also want to keep customers engaged on the primary set-top when they use Netflix rather than seeing them toggle to another input such as a Blu-ray player, a Roku Inc. or Boxee box, a game console or via a connected TV.

— Jeff Baumgartner, Site Editor, Light Reading Cable