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Can Netflix and Cable Actually Work Together?

By Daniel B. Kline - Mar 31, 2016 at 8:20AM

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One smaller pay-television player has decided to embrace rather than fight the streaming service.

Even beloved new technology does not automatically supplant what came before it. Television and radio both still exist, for example, and in many cases, the Internet actually works to supplement traditional TV shows. Yes, CDs replaced tapes, which had replaced records, each making its predecessor essentially irrelevant. Now, of course, streaming subscriptions have mostly eliminated all physical music, but emerging technology does not always lead to the death of whatever it replaces.

That's why we shouldn't necessarily believe all of the talk about Netflix (NFLX 5.03%) and other streaming services meaning the ultimate end of cable as we know it. It's possible consumers will want as much quality programming as they can get. In that world, Netflix simply becomes another successful premium channel -- a variation on HBO or Showtime.

It might be possible for traditional pay television and Netflix to not only co-exist, but to enhance each other. Frontier (FTR) has embraced that idea and has embedded Netflix in its new digital cable platform.

Frontier now lets its customers access Netflix directly through their cable box. Image source: Netflix.

What is Frontier doing?
One of the biggest challenges for Netflix users who also have cable is that you cannot access the streaming service through your cable box. Using Netflix requires either a Smart TV or a set-top box. That creates a bit of an awkward break: Consumers can't simply flip around to the service, they actually have to put in some effort to switch over to it.

On the non-Smart TV in our living room, using Netflix meant switching to an Amazon Fire TV. Doing that required using the television remote (not the one that operates my cable box) to switch inputs, then the Fire TV remote once I actually accessed Netflix. It was an unwieldy process that actually cut down on how often I used the streaming service. Sometimes it was simply not worth tracking down all of the remotes in the dark after my wife had gone to sleep, and other times, I didn't want to switch to a source that made it difficult to flip back to check a sports score.

By embedding Netflix into Vantage, its new digital platform, Frontier has solved that problem. Now, as I flip through channels, I simply pass Netflix (at both 800 and 1,800) on my cable dial. if I want to watch something on the service, I can launch it using my cable remote. It does have to load, but it's a streamlined process that integrates the two television platforms I pay for.

Why are more companies not doing this?
By integrating Netflix into its cable platform, Frontier has actually increased the value of its service. If I cut the cord, replacing it would require using a series of streaming services, and perhaps an HD antenna. That's fine if you know exactly what you want to watch, but it's less ideal for channel surfing. With Frontier's new product, the company delivers Netflix in the regular flow of how I watch television. That keeps me from switching away to my set-top box and strengthens my ties to the cable company.

Of course, there's also some financial incentive for Frontier to offer Netflix. It's possible for non-members to sign up directly from their televisions, and the odds of that happening are enhanced by the fact that Vantage users flip past the Netflix offer. Generally, when a third party generates a sign-up for a streaming service, it gets a piece of the ongoing revenue -- usually around 30%.

Cable sees Netflix as the enemy, when really it should see it as simply another product to sell. People who cut the cord with cable in favor of giving up streaming services are actually giving up dozens, if not hundreds of viewing options. Integrating Netflix with cable is a way to enhance the pay-TV model of having something for everyone. 

By making this deal, Frontier has made things easier on its customers while giving them a better product. That could be enough to keep them from leaving.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$190.85 (5.03%) $9.14
Frontier Communications Corporation Stock Quote
Frontier Communications Corporation
FTR, Inc. Stock Quote, Inc.
$116.46 (3.58%) $4.02

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