Netflix Cracks Top 10 MSO

In the latest broadband breakthrough for Netflix, the online giant has struck a deal with Suddenlink Communications to stream to the MSO's cable set-top boxes.

Suddenlink Communications , the seventh largest US MSO with about 1.2 million video subscribers, thus becomes the biggest North American cable provider to come to terms with Netflix Inc. (Nasdaq: NFLX) and potentially transform it from a powerful broadband video rival to a budding partner. Less than two weeks ago, three smaller cable operators and overbuilders -- Atlantic Broadband , Grande Communications , and RCN Corp. -- broke the ice by signing the industry's first carriage deals with Netflix. (See Netflix Streams Onto US Cable.)

No terms of the deal were disclosed. But, like Atlantic Broadband, Grande, and RCN, Suddenlink plans to offer Netflix service as an app on leased cable set-top boxes from TiVo Inc. (Nasdaq: TIVO) that can easily integrate online video and broadcast video services. That has also been the formula followed by the two large European MSOs -- Virgin Media Inc. (Nasdaq: VMED) and com hem AB -- that have launched Netflix as a premium video service alongside their more traditional pay TV fare.

Suddenlink, which primarily operates in parts of the southeastern US and Texas, said it intends to start offering Netflix to customers sometime this summer. It did not say whether it would phase in the deployment in stages or launch Netflix throughout its regions at the same time.

What's also not yet known is how Suddenlink customers will be billed for their Netflix use. But the MSO will likely follow the model established by the three smaller MSOs and Netflix, which will bill its customers separately from the cable providers and thereby maintain its own relationship with its customers.

Suddenlink credited its new "partnership" with Netflix, at least in part, to its earlier partnership with TiVo nearly four years ago. In July 2010, the MSO notched one of the first cable integration deals with former industry pariah TiVo, opening up the floodgates for a number of other MSOs.

That scenario seems likely to play out again now that TiVo pioneers Suddenlink, Atlantic Broadband, Grande, and RCN have blazed the path once more. Look for other US cable operators that deploy leased TiVo set-tops, such as Mediacom Communications Corp. and General Communication Inc. (GCI) (Nasdaq: GNCMA), to follow suit.

Besides signing its first US cable carriage deals, Netflix has also made important strides on the peering front recently. In the past couple of months, it has also struck direct interconnection agreements with Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Verizon Communications Inc. (NYSE: VZ), two of the three biggest broadband providers in North America. (See Comcast-Netflix Peering Deal: A Game-Changer?)

In future stories and blogs, we'll have more to say about what all these new deals mean for Netflix, the cable industry, and the pay-TV market in general. Stay tuned.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

SachinEE 5/8/2014 | 4:45:40 AM
Re : Netflix Cracks Top 10 MSO  I think it is a good deal for Netflix and they are counting this as an achievement, we may not know terms and conditions of this deal but an certain that it is a good deal for them, considering that Suddenlik Communication is a great cable provider. I can say it has been good with Netflix the way they are getting these deals with these great companies like Comcast Corp and Verizon Communications Inc.
Liz Greenberg 5/7/2014 | 5:56:21 PM
Re: Good traction I think that the biggest value from the consumer perspective is one less device and one less remote. However, unless everything that is offered via Roku, Chromecast and all the rest of the streaming devices is delivered via the same box that particular value is worthless.  The next value would be one less bill to pay but if you also want the DVDs then that value goes away as well.  So then one has to ask, will it cost me less?  If not, then the only value is for those who only use Netflix with their current cable.

The value from the cable provider may be the hopes of retaining subscribers?
CraigPlunkett 5/7/2014 | 1:38:35 PM
Re: Good traction My memory turns out to be good but I was thinking of the peering issue, not the settop box


: http://multichannel.com/news/cable-operators/ces-cablevision-cuts-cdn-deal-netflix/326075


CraigPlunkett 5/7/2014 | 1:36:58 PM
Re: Good traction Wasn't Cablevision first to join up with the Netflix Direct program?  I seem to remember that happening at least a year ago.
Sarah Thomas 5/7/2014 | 1:06:06 PM
Re: Good traction So what's the value of a Netflix partnership to the consumer? Is it free for them, as a replacement DVR service? I have Netflix through my Chromecast or Internet-connected TV, but I still pay $8 per month for it. Would it be better through AT&T? Their on-demand is pretty pathetic, so they could use the partnership.
KBode 5/7/2014 | 8:22:21 AM
Good traction It's nice to see smaller cable operators make some traction on this. Only makes sense as an added value option. I'd assume the Comcast, Netflix and AT&T's of the world aren't in a rush to add this kind of functionality because they fear it would take eyeballs away from their own, Netflix-esque offerings?
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