Netflix (Nasdaq: NFLX) is in preliminary discussions with cable operators, including Comcast (Nasdaq: CMCSA), about becoming an app on the set-top box, according to CEO Reed Hastings. Speaking during the company's third quarter earnings report, Hastings confirmed reports that circulated last week about Netflix working with cable companies, but he noted there are several issues that would need to be resolved first.
In a video webcast with analysts after the earnings were released, Hastings said he was hopeful the company would reach a deal with Comcast and other pay-TV providers. However, one of the big issues to be resolved first is the role of Netflix's Open Connect content delivery system. Netflix reportedly wants cable companies to use the delivery network, but cable operators are concerned about this paving the way for similar demands from other over-the-top providers.
Netflix delivered third quarter net income of $31.8 million, which is quadruple its year-ago results. The company's revenue jumped 22.2 percent to $1.11 billion and its U.S. subscriber count keeps rising. The company reported that as of Sept. 30 its U.S. subscriber base had surpassed 30 million, up from 28.6 million in the second quarter. Internationally, the company has 9.19 million subscribers. In the United States, streaming subscribers topped 29.93 million, up from 23.8 million.
In an interview with Reuters, Hastings said the company would like to ink a deal with cable operators that is similar to what it has with TiVo. Earlier this year Netflix said its service would be available on TiVo set-top boxes offered through Com Hem in Sweden and Virgin Media in Britain, allowing subscribers to watch Netflix shows and movies through an app.
Netflix has hooked many of its new subscribers with its original series "House of Cards" as well as its library of TV shows and movies. The company's original programming has made it more valuable to cable operators. According to Bloomberg, citing people familiar with the matter, Netflix is talking to cable providers such as Cox Communications, Suddenlink, RCN and Atlantic Broadband, as well as Comcast.
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