NEW YORK (TheStreet) -- Netflix's (NFLX) deal with the DISH Network (DISH) is certainly a boon to the satellite-TV operator that has long done things that other payTV operators would never do. But for Netflix, the deal is even more significant because it's all about its increasingly aggressive competition with Time Warner's (TWX) HBO.
DISH will offer Netflix streaming video through its Hopper set-top boxes, the companies announced earlier this week. That means Netflix subscribers with a DISH second-generation Hopper box will be able to stream shows like Orange is the New Black and House of Cards directly to their televisions with the same box they use to access television channels.
The deal is part of a Netflix's identity shift. CEO Reed Hastings is clearly tinkering with the streaming service's business model as he prepares to compete head-to-head with HBO, which is expected to become available as a standalone digital services sometime in the spring.
"Netflix, when they launched their digital service, wanted to compete with satellite companies and be aggregators of content," said Shahid Khan, chairman of MediaMorph, in a phone interview. "Since then, they've realized they can't compete with cable and satellite, and they have to position themselves more like HBO."
The deal with Netflix reflects Hastings' view that it's more important to make friends with cable- and satellite-TV providers than to view them as the enemy. In other words, the payTV bundle of dozens of channels can co-exist with Netflix, the all-purpose streaming powerhouse that accounts for roughly one-third of all Internet video traffic among U.S. households during the typical evening.
Over the past decade, Khan said, Netflix has evolved from a movie and television show aggregator to a major buyer of original programming. Not incidentally, HBO followed the same route to become a premier producer of high-quality television serials.