The story took off, and now seems to be crashing, even faster than Herman Cain’s presidential campaign. Pay TV’s three biggest distributors — Comcast, DirecTV, and Dish Network — aren’t interested in carrying Netflix, industry news service SNL Kagan reports. That could dampen some of the excitement about the idea that built up this week after Reuters said that Netflix CEO Reed Hastings “has quietly met with some of the largest U.S. cable companies in recent weeks” to talk about having them offer his video streaming service. It added that by year end at least one cable company could offer Netflix on an experimental basis. The story grabbed everyone’s attention: Hastings recently told an investor group that cable operators would love to become less dependant on HBO — and offering his streaming service “might be very powerful, especially as we have more original content.”
A pay TV alliance with Netflix would have far-reaching ramifications. Analysts speculated that it might lead Time Warner to offer its HBO Go streaming service directly to consumers, instead of requiring them to subscribe first to cable or satellite. If Comcast picked up Netflix, then it would raise questions about the cable giant’s faith in the streaming service it recently launched, Streampix. Similarly, Dish execs would have to explain how Netflix could co-exist with their own Blockbuster rental and streaming service.
But if these heavyweights are out of the picture, then it’s hard to see how Netflix could build a meaningful business on pay TV. Comcast, DirecTV, and Dish account for about 56% of the country’s 100M pay TV households. You get up to 60% if you throw in Verizon’s FiOS, which presumably won’t want to help Netflix while it prepares to introduce a rival video service in a joint venture with Redbox.
