As cable providers continue to feel the pinch of lost subscribers, many are looking to partner up with Netflix. It's a trend that has been ongoing over the past several years. However, According to Netflix CEO Reed Hastings, Netflix is taking a deeper look at proposals to add the streaming service to "some services and beginning to learn the bundling part" of the industry. Whether or not the expansion into bundles has anything to do with the company's current economic standings wasn't explicitly stated, but the idea that Netflix would want to involve itself with the cable industry makes sense regardless of its financials. It also makes sense for those looking for gains in the U.S. cable market since tie-ins could stem some of the cord-cutting trends that have plagued the industry.
To be clear, several providers have already integrated Netflix into their set-top boxes in the U.S and the trend follows relatively successful inclusion of the service by providers outside of the country. Comcast, for example, placed Netflix alongside other channels inside one of its more popular sets in November of 2016 – which is in use by 11.8 million of its subscribers, according to the company. Of those users, 31 percent have used Netflix as of May. Other companies, many of them smaller, started adding the service earlier. TiVo boxes offered by providers, such as RCN, have included Netflix as of 2014. Importantly, at least for Netflix, the conversion rate to paid customers from free-trial users was as high as 80 percent, as observed by RCN. Moreover, as many as 13 of the top 25 paid service distributors in the U.S. have arrangements with Netflix that include the service through their equipment. Charter Communications is expected to join that list soon, as well.
The benefits of adding an offer of the well-performing, if currently indebted, Netflix platform to a cable service provider's existing lineup can be attributed to how popular the streaming service already is. At the end of June, the company boasted almost 52 million users. By including the service, cable companies are adding a service people already use and a more consolidated, and convenient, experience is created for users. Netflix also has a lot to gain in terms of new income generated by its inclusion in bundles and the associated partnerships.