Streaming services strike deal with cable companies

NEW YORK • The enemies are at the door, but cable companies plan instead to roll out the welcome mat for streaming services such as Netflix and Hulu.

Comcast and Charter Communications, the two biggest American cable operators, are in talks to offer Hulu's on-demand service through their set-top boxes, according to sources.

Comcast already offers Netflix, YouTube and Dish Network's Sling TV via its X1 service.

Giving customers seamless access to Hulu's catalogue moves Comcast a step closer towards its goal of becoming a one-stop shop for digital video services.

"That's the biggest role of a distributor - how we're able to offer all these choices on one platform," Mr Matt Strauss, a Comcast executive vice-president, said.

"To a customer, these are just choices and you shouldn't have to switch inputs or figure out how to get to that choice."

Charter also plans to add Netflix in a new user interface that integrates Web video, a source said.

Altice USA, the fourth-largest United States cable provider, is also in talks with Netflix, according to another source. It already features YouTube videos and Pandora, the streaming music service, on its new Altice One cable system.

Pay TV companies once viewed streaming services as existential threats to their business, enabling users to watch popular TV shows on demand without paying for a cable or satellite package.

Comcast has tried out usage-based pricing, which charges Internet customers extra if they stream over a certain amount.

Those early misgivings have been outweighed by cable companies' need to stay relevant. Consumers are watching videos throughout the day with little regard for whether they originate on the Internet or TV.

The screen that cable subscribers see is evolving from a grid listing hundreds of channels to a slick interface resembling an iPhone or tablet screen, with tiles featuring various apps.

Adding an app from Sling TV to that homepage can give customers foreign channels they might not otherwise get.

Cable operators said many of their subscribers already stream videos from Netflix, Amazon and Hulu. And even when customers watch online video instead of traditional cable, they are using the pay TV companies' high-speed Internet services to do it, so they are not a total loss.

By helping customers avoid the hassle of juggling remote controls or toggling between applications, the cable companies are hoping to appeal to a Web-savvy audience and hang on to more customers.

"The pain of switching between inputs, trying to download apps or going app by app to search for content will no longer be friction points," Barclays analyst Kannan Venkateshwar said in a note earlier this year describing Comcast's strategy.

While adding an app may seem easy for a cable company to do, the negotiations are complex, covering issues such as how to split revenue from new subscribers and who has access to viewer data.

Last quarter, Comcast lost 125,000 cable TV customers, the biggest decline in three years. Charter lost 104,000 TV subscribers.

The losses highlight how tough it is for pay TV providers to charge US$85 (S$114) a month as online video competitors such as Netflix offer more and more for US$7.99 to US$13.99 a month.

But the streaming providers have also seen reason to hammer out a win-win deal with the cable guys.

Netflix has struck deals with several telecommunications companies and pay TV providers outside the US to put its shows in front of more customers, including one announced last week with Deutsche Telekom.

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A version of this article appeared in the print edition of The Straits Times on November 29, 2017, with the headline 'Streaming services strike deal with cable companies'. Print Edition | Subscribe