TiVo has the technology and the software ready to go to integrate Netflix with traditional linear and on demand programming. Should it quickly be able to integrate all the content under a simple interactive search menu, TiVo could become the preferred cable set top box for cable operators. And for those that already have a deal with TiVo, the ability to quickly support a Netflix addition to their offerings. Certainly, a partnership between Netflix and cable operators would be a win for Netflix and consumers. "For Netflix, forging ties with cable providers could fuel expansion by putting its Web-based programs alongside traditional TV shows" according to Tom Rogers, CEO of TiVo. TiVo would certainly benefit as well.
But like John Malone, CEO of Liberty Media, I wonder of such a deal, in the short term is good for the cable operator. Would operators be better suited providing their own streaming video service and fully enable TV Everywhere of their current linear and on demand offerings. For instance, why shouldn't cable operators be enabled to stream all the back seasons of Breaking Bad to authenticated viewers on any device as a result of its carriage of the parent network, AMC. Netflix's edge would then be limited to original programming, not yet offered to cable.
Cable operators though worry that not embracing services like Netflix could lead to full cord cutting. Making it a choice within the cable infrastructure could result in consumers maintaining their cable subscriptions and not cutting their cable cord all together. What should worry cable operators more is that their total cost of service is what is driving customers to drop cable. Offering a Netflix option on the cable box works if cable customers can access without having to buy an expensive package of service.
I would love to see some research on what percentage of Netflix customers also have a cable subscription, what percentage watch premium services like HBO, Showtime, and Starz, and what percentage has dropped premium channels or cable service completely in the past year. Cable operators may find that Netflix is not a competitor to its business model but rather an additive choice that customers will embrace while also staying loyal to cable. And if that is the case, Netflix should present those findings to cable operators and operators should be quick to start a partnership with Netflix.