This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Netflix's Search for Bundling Buddy

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Netflix (NFLX) is reportedly in talks with major U.S. cable companies in the hopes of finding a partner to offer its streaming service as part of cable TV programming bundle. This is surprising as in recent years these companies considered Netflix a threat. However, given that Netflix has concentrated on bringing older movies and TV shows to its subscribers, it has transformed its image from a threat to a complementary service for cable companies.

The company has realized that partnering with the cable companies can provide a new marketing channel which will help boost its subscriber growth and consequently help it expand its lead in content among major streaming services. This will help Netflix in competing better against the emerging players such as Amazon (AMZN), Dish Network's (DISH) Blockbuster and others. We talked about this emerging competition earlier.

Netflix

See our complete analysis for Netflix

If we extend this opportunity to whole spectrum of pay-TV service providers, we find that the majority of the big ones are looking to create their own service and so are probably uninterested in Netflix's offering. Dish has Blockbuster, Verizon (VZ) is partnering with Redbox, DirecTV (DTV) has plans to launch its own streaming service and Comcast (CMCSA) has already launched Xfinity Streampix.

It appears that Netflix's potential partner could be Time Warner Cable (TWC) for a few reasons. Firstly, Time Warner Cable does not have a viable streaming service that can emerge as an alternative to Netflix. At best it offers apps to stream current programming on few devices.

Secondly, unlike others, Time Warner Cable's pay-TV subscriber trends didn't improve in Q4 of 2011. Thus the company can bundle Netflix's service to improve subscriber experience and gain from cross-marketing opportunities.

Thirdly, Time Warner Cable has been traditionally slow to catch up with industry changes and partnering with Netflix might be a viable option to launch a streaming offering.

Our price estimate for Netflix stands at $133 , implying a slight discount to the market price.

Click here to find out how a company's products impact its stock price at Trefis

Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $125.69 -0.25%
FB $87.22 -0.38%
GOOG $525.02 0.41%
TSLA $267.88 -4.23%
YHOO $38.23 -0.98%

Markets

DOW 17,776.91 +93.33 0.53%
S&P 500 2,081.34 +12.58 0.61%
NASDAQ 4,997.4590 +5.5190 0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs