A Netflix Cable Channel? Right for Netflix, Possibly Right for Us

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Robert Galbraith / Reuters

The headquarters of Netflix is shown in Los Gatos, California September 20, 2011.

Netflix may be trying to reshape its future by positioning itself as an honest-to-goodness cable channel to square off against the likes of HBO, Cinemax, Showtime and Starz (note: TIME‘s parent company, Time Warner, owns HBO). According to Reuters, Netflix honcho Reed Hastings has been meeting with U.S. cable bigwigs in hopes of injecting the company’s streaming video service directly into your TV’s cable box.

If true, and Hastings manages to clinch a deal (or deals), it means Netflix could become another option in your cable TV programming lineup. What’s more, it means Netflix would go toe-to-toe with premium cable channels as a source of original programming with its own exclusive content lineup. It’s already entered the game on the streaming side: The company recently launched Lilyhammer, a Norweigian-American mob drama starring Steve Van Zandt (of The E Street Band and The Sopranos fame) that’s received generally positive press to date.

(MORE: Hulu and Netflix Begin Forays into Original Programming)

But while Reuters’ sources say it’s possible we’ll see at least one cable operator experimentally offering Netflix as a premium option by year’s end, Hastings recently told investors that Netflix is looking at a cable partner-up as something that’ll take time. “It’s not in the short term, but it’s in the natural direction for us in the long term,” said Hastings, singling out HBO as the company’s chief competition and suggesting that cable service providers might “bid [Netflix] off of HBO.”

My concern about Netflix getting into the cable-programming game is simple: I’d hate to see the company jeopardize what it does better than anyone else today — streaming on-demand, high quality video via most major platforms — by diving into a multimillions spending battle with behemoths like HBO, battling over back-catalogues and securing first-rate original content. HBO has over a decade of experience in the latter game (counting from The Sopranos forward) and over 100 shows under its belt. Netflix has one, with a bare handful of possibles in the offing. And HBO has billions in annual revenue and spends big on TV shows — as much as $10 million alone for the pilot episode of its recent fantasy breakout, Game of Thrones. Netflix, by comparison, had just $347 million in cash per a CNN/Money report last September. In fact the latter story basically argues Netflix can’t afford a streaming video war. If that’s true — unless the company manages a bunch of indie-budget, viewer-embraced coups — how are they ever going to afford an original programming war?

But let’s say we’re talking just streaming for starters. Moving into the cable space could be pay dirt for Netflix. The company wants and probably needs to get in front of traditional cable TV viewers who don’t already subscribe to its streaming video service through alternative TV-linked devices like computers, game consoles or digital media receivers like Roku or Apple TV. Assuming it can, it then has to persuade consumers its ever-shifting back catalogue of movies and TV shows as well as whatever it’s doing in the original content space are worth paying extra for (the sort of “extra” consumers may already be dishing out for channels like HBO, Showtime, premium sports content and so forth).

Full disclosure: I’m speaking from the vantage of someone who gave up set-top cable TV back in 2008, and who uses Netflix to watch nearly everything. Anything else, I pick up on Blu-ray where I can enjoy it at the highest possible quality without commercials and without waiting a week (or more) for new episodes to air. My wife and I depend on Netflix for just about everything, and I suspect that’s the case for a significant chunk of its 25 million subscribers (a report in October last year indicated that Netflix accounts for one-third of peak downstream traffic in the U.S.). I’m the guy that wants channels like HBO to come over (and Starz to come back) to Netflix.

(MORE: 50 ‘Starz’ Movies That Are About to Disappear from Netflix Streaming)

That’s because — let’s shoot the moon for a minute — my holy grail looks something like this: On-demand, cloud-based streaming of live television broadcasts as well as programmed and static content through one seamless service and/or interface. I’ve chosen every term in that sentence with care. On-demand because I want to control when I watch something: as it airs (live or programmed), recorded DVR-style or plucked from a static repository. I want it in the cloud so I can grab it anywhere, phone, tablet or TV. And “one seamless service and/or interface” means I get all of the above without stuffing multiple boxes and cables into my entertainment center or paying multiple different companies for access to multiple different services.

But since we’re not going to get that (and even if we could, there’s that pesky “monopoly” thing) we’ll have to settle for multiple portals to our favorite programs. If Netflix winds up on cable boxes, it’ll at least be a step toward set-top consolidation. That, and it would bring a massive back catalogue of programming to consumers for on-demand consumption, presumably for the same flat monthly fee ($7.99) Netflix subscribers pay now. It also partly circumvents the Netflix-HBO question, putting Netflix conveniently beside HBO, since HBO seems more interested in pushing its own streaming service in lieu of licensing its shows away. As long as Hastings and Co. don’t bite off more than their still young streaming service can chew, a cable-bound “Netflix channel” has the potential to become a respectable alternative in the ongoing cable-streaming wars.

(MORE: Is Netflix Coming to Cable TV?)

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