Todays development in weird potential frenemy relationships is an interesting one with Comcast now planning to bundle Netflix into its cable subscriptions, the companies announced today. Known as the original cord-cutting service, Netflix serves as a hub for not only a ton of original content, but also a huge catalog of movies and shows that offer a near-endless flow of entertainment for the average user for less than $15 a month. Comcast added Netflix to its X1 interface starting in 2016, but it appears that the success of this among traditional cable subscribers may have encouraged Netflix to begin working more closely as it tries to tap more and more consumers. The companies said they will expand that existing relationship by bundling Netflix into the overall subscription in new and existing Xfinity packages. Netflixs subscriber growth — the primary driver of its value as a public company — continues to surge, and it appears that this could be another piece in its tool kit to keep that engine humming. Those cable packages already include an increasing breakout of diverse services that allow for streaming outside of the over-the-top experience, like HBO Go and ESPN, and this offers another streaming service on-the-go for users. By tethering to additional over-the-top services, Netflix has a chance to woo subscribers that might otherwise just stick with their existing service providers and bake itself directly into that experience. These kinds of cross-platform subscriptions are becoming a little more common and a big driver of user growth — for example, Spotify works with Hulu to create a multi-service subscription that ends up, on paper, with more users for both. Getting that taste may also encourage users to eventually graduate onto the service directly and drive additional revenue for those companies. Whenever Netflix reports its quarterly earnings, all eyes are typically on that subscriber number. Its the leading indicator for the companys growth, even as it spends more and more money on original content to acquire subscribers. But by getting into the cable bundle, Netflix can find a way to get that content into the hands of subscribers that may one day cut the cable as more and more streaming options emerge for the content they typically want. ESPN is already dipping its toes into the streaming side with ESPN+ , which while limited signals an opportunity to break out and attract those consumers that arent interested in a cable bundle. The bundle, which will be available to new and existing Xfinity customers, will be included in its cable TV, phone and internet plans. It seemed throughout the lifetime of Netflixs streaming expansion that it would be the harbinger for cord-cutting, but now finds itself fitting with existing consumers that already are fine with a cable subscription.
AT&T's potential purchase of Time Warner could draw the two closer. It may sound strange at first, but the latest option in Comcast's Xfinity cable bundle is... Netflix. Despite their differences, the two have forged a partnership lately, with the Netflix app included on Comcast's X1 platform since 2016 (with access by voice, universal search and recommendations) and already available as an add-on through customer's cable bills. Comcast wasn't specific about the "new and innovative" offers it will roll out, saying they will vary by market and are available to both new and existing customers. No matter how customers pay for or access Netflix streaming, though, it still counts as part of their 1TB data cap. If you're wondering why the two are taking this step, it's important to remember that Netflix CEO Reed Hastings has talked about Netflix being bundled into cable subscriptions for years. In 2012 there were rumored meetings between the two sides, and in Europe the arrangement already exists with certain providers. Just last summer Hastings mentioned on an earnings call that the company had increased interest in the area: Reed Hastings (7/27/17): "... as you point out, we're now looking at proposals for including Netflix in some services and beginning to learn the bundling part of the business. We're doing a little bit of that in Europe already and it's been quite successful, thus we're interested in expanding that." While concerns over cord-cutting would suggest the two companies see each other as enemies, Netflix is a popular service for Comcast subscribers. In their joint statement, the two said nearly 50 percent of X1 customers are "actively" using Netflix on the platform, and that in households that use the app via X1, it's the most-used platform for streaming Netflix. Another factor is the potential merger between HBO-owner Time Warner and AT&T. Hastings has long positioned HBO as the competitor for Netflix, in terms of dollars and customer attention, and if Comcast needs any additional leverage in negotiating arrangements, having Netflix to swap in makes a lot of sense. U.S. antitrust officials suing to block the deal recently claimed Time Warner used HBO as leverage to put its other cable channels on YouTube TV and argued that AT&T could try to raise prices on its rivals like Comcast. Netflix's global head of business development Bill Holmes said: "We can't wait to introduce more X1 customers to Netflix with Xfinity's new packaged offers." The sentiment is mirrored by his Comcast counterpart Sam Schwartz, who said: "Netflix offers one of the most popular on demand services and is an important supplement to the content offering and value proposition of the X1 platform." On Netflix's side, this arrangement provides easy access to any customers who aren't already signed up for its subscription service (52 million in the US and counting) with someone else handling the billing and marketing. all while coming off the quarter with its biggest growth ever. Not a bad deal for the Albanian army.