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Netflix: OK, cable giants, who wants our PIPE stuffed in their BOX?

Seeks deals to come built in on TV set-top boxes, claim insiders

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Streaming-media titan Netflix is reportedly looking to smooth relations with major US cable companies and convince them to make Netflix content available via next-generation TV set-top boxes.

The company has been in talks with cable providers including Comcast and Suddenlink, the Wall Street Journal reports, citing anonymous sources.

The cable giants have rebuffed Netflix's advances in the past, viewing the online service as a competitor rather than a potential partner. But they may be growing more amenable to the idea of a truce in light of the popularity of such Netflix-produced programming as Orange Is the New Black and the Kevin Spacey vehicle House of Cards.

In addition to its original series, Netflix also carries episodes of popular shows that originally aired on cable networks, allowing subscribers to watch reruns on demand.

This streaming model has proven so popular that a growing number of Americans are considering "cutting the cord," studies show, opting to drop their cable TV subscriptions and go exclusively with online streaming services - such as Netflix, Amazon Prime, and Hulu Plus.

Doing so has been made all the easier in recent years by the emergence of internet-enabled smart TVs, web TV boxes like the Apple TV, and inexpensive next-generation devices such as Google's Chromecast, most of which include built-in support for Netflix streaming.

So far, however, big cable companies have declined to include Netflix support in their digital set-top boxes, opting to push their own on-demand video offerings instead. But that hasn't stopped Americans from signing up for Netflix, which had grown to 30 million US subscribers as of its last quarterly earnings report.

Some analysts believe a deal with Netflix could actually be beneficial for a cable company like Comcast, which in addition to providing pay TV is also the largest home broadband supplier in the US. Customers who watch a lot of streaming online video might be more likely to spring for pricier high-bandwidth data plans.

Yet there may be a sticking point in the negotiations. As a condition of any deal, Netflix reportedly wants cable companies to sign on for its Open Connect content delivery network, which says is necessary for it to deliver 1080p HD video to its subscribers.

Major US internet providers including AT&T, Time Warner Cable, and Verizon have so far refused to participate in Open Connect, claiming their existing networking setups are already more than fast enough to deliver what Netflix has to offer.

But companies in other countries have proven more open to the idea, and several – including British Telecom and Virgin Media in the UK, Telmex in Latin America, and Bell Canada and Telus in Canada – have already inked deals with Netflix.

Neither Netflix nor the US cable providers would comment directly on the WSJ report. But at the annual Goldman Sachs Communacopia Conference in September, Netflix chief financial officer David Wells strongly suggested that the streaming-video provider would like to forge closer ties with US cable firms.

"We would love to reduce the friction to the end consumer and to be available via the existing device in the home, which is the set-top box," Wells said. But he added, "it's up to the [cable companies] to decide how much of a competitor they view us as or a complement and how much they might be willing to do something with that." ®

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