Netflix has grabbed its first foothold with cable operators in the United States, with plans to launch on three smaller companies next week through an app on TiVo DVRs.
The deals are with RCN Communications, Atlantic Broadband and Grande Communications. The MSOs are tiny compared with giants like Comcast or Time Warner Cable, but the deals show that at least some in the cable biz are receptive to Netflix's overtures. RCN has about 333,000 video subs, while Atlantic Broadband has 230,000 customers and Grande serves around 140,000.
In announcing first-quarter earnings Monday, Netflix had said it would launch the first pay-TV integration of its service in the U.S. The streaming-video leader has inked similar pacts with European providers, the biggest being the U.K.'s Virgin Media, to provide access to Netflix's service. Virgin Media, like the U.S. operators, offers Netflix through TiVo set-tops.
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TiVo customers on RCN, Atlantic Broadband and Grande will need to have an existing Netflix subscription. If they don't, they can sign up directly on the TiVo boxes in a three-step process, to receive the standard one-month-free offer, but eventually they would have to set up an account with Netflix.
Isenberg compared the addition of Netflix as similar to premium channels like HBO and Showtime. In fact, Atlantic Broadband will add Netflix as a channel in its grid guide on TiVo set-tops, adjacent to other premium cablers. "Watching Netflix is as easy as picking up the remote and changing the channel," he said.
Atlantic Broadband customers with TiVo DVRs will begin seeing Netflix activated starting Monday afternoon, he said. The operator, which serves about 230,000 customers in six states, launched TiVo option for customers last October. The company would not disclose how many customers have taken TiVo DVRs, but Isenberg said the launch "has been greater than we expected."
One of the critical barriers Netflix needed to resolve was that clauses in some of its previous licensing contracts with Hollywood studios prohibited the company from offering service through pay-TV operators. Netflix over time has updated those deals for the U.S. market, and it's now crossed those hurdles.
Atlantic Broadband participates in Netflix's Open Connect content-delivery program, in which caching servers are co-located within the MSO's data center. That lets the operator deliver much higher-quality video "at a lower cost to both us and Netflix," Isenberg said.