Netflix Gets Gold Medal Treatment From Comcast

In business, a few bucks can turn enemies into friends, and vice versa. This is especially true in the TV business, where fierce competitors become partners. And often while a part of one media conglomerate is at war with a rival, that rival is a big customer of another division of the same big company.

Upstart Netflix, which has been compared to everything from the death star to the Albanian army by traditional media company executives, is inexorably being absorbed into the media ecosystem.

The latest example is Comcast’s embrace of Netflix. At one point, Netflix was a threat to Comcast’s cable business by providing a big enough bundle of programming to inspire cord cutting, in addition to cutting into viewership of NBCUniversal’s broadcast and cable ratings. In 2014, after a long dispute, Netflix agreed to pay Comcast to ensure that Netflix subscribers got smooth service over Comcast’s broadband lines.

Making things even more incestuous, Comcast is a part owner of Hulu, a direct competitor to Netflix as a streaming video service. But attitudes change and business is business.

At the Goldman Sachs investor conference last year, Comcast CEO Brian Roberts talked about how his company now is embracing Netflix.

Comcast is treating Netflix like one of its crown jewels, the Olympics. To integrate Netflix into Comcast’s X1 set-top box software, “we took that same team, and we said let’s make that work for Netflix,” Roberts said. “We are working with Netflix to give that same seamless experience to our customers.”

Comcast now has Netflix in beta testing and expects it to roll out across the entire Comcast footprint before Thanksgiving.

Comcast subscribers will be able to find Netflix in the app section of X1 and get the Netflix experience.

But it can also find Netflix programming through regular Xfinity menus.

“Here in television, which is what pops up first, you will see Netflix featured right side-by-side with traditional other choices and other content,” said Roberts, who demonstrated how it will work. “If you are not a Netflix customer, we can upsell just as we do other premium,” he said. “A couple of clicks, one log in and now you are getting Netflix.”

Now and ‘Forever’

When a Netflix show ends, bingeing viewers will first be offered the next episodes of that show. But if they exit, they’ll go to the X1 menu. “This is something we have worked out with Netflix,” Roberts said. And when viewers return to a Netflix show, they go right back to the middle of it. “It’s just as if Netflix has been there forever. So we are really excited about rolling this out,” Roberts said.

Comcast’s acquisition of DreamWorks Animation makes it an even bigger supplier of content to Netflix, which carries episodes of NBC hits Law & Order: SVU and The Blacklist. “I didn’t realize that a lot of their content available on Netflix is coming from DreamWorks Animation,” Roberts said.

Roberts said this era of good feelings came after some one-on-one time with Netflix’s CEO.

“Reed Hastings and myself spent some time together. We have always had tremendous respect I think for both organizations. We occasionally didn’t see eye to eye on everything. And we found a way to just really think for the consumer,” Roberts said. “We spent a lot of time talking about how to make this, put the consumer in charge. And frankly working through this, the two companies have gotten a lot closer, and I am really pleased with the relationship.”

Roberts said Comcast waited to incorporate Netflix into its boxes until X1 was installed in enough of its footprint to do it right— it was at about 45% during the Olympics. And other over-the-top providers could get integrated down the road.

“We have decided to focus on this one. It’s the biggest one. It’s arguably the most important to get right. And now I think we have a nice template,” he said.

Comcast has already begun pitching Netflix to subscribers with similar enthusiasm.

“Love Netflix? Coming later this fall, you’ll be able to enjoy all of Netflix right on Xfinity X1. No more switching devices or inputs,” enthused one email sent to Comcast subscribers.

“Use your X1 Voice Remote to easily search for House of Cards and other great Netflix shows or movies. Discover that Narcos is ‘Recommended for You.’ With the addition of Netflix, Xfinity X1 will change the way you experience TV.”

Almost the same way Netflix is accelerating change in the TV business. For Comcast, adding Netflix comes at a time when much of the industry is focusing on letting viewers pay less and get fewer networks via skinny bundles.

“I don’t know that that’s really what people want. There is certainly some who want to pay less, but I don’t know too many programmers who were saying, I want to go a la carte and it works for my business,” Roberts said.

Roberts noted that while Comcast is experimenting with skinny bundles, it is adding customers thanks to X1, voice remotes and adding VOD content.

"Our focus is to continue to make the bundle more valuable,” he said.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.