“Who is your real TV competitor?” That has always been the question haunting Netflix -- and now, even more so.
A little while ago, Netflix CEO Reed Hastings said the answer wasn't what some analysts might think -- TV networks, cable or satellite TV distribution companies. He said the closest competitor was HBO Go, the mobile streaming video service of HBO.
In that regard, the news that Netflix is now talking to major multiple system cable operators about a possible programming deal shouldn't come as too much of a surprise.
Prospective pacts might include having Netflix's growing online video service as part of cable broadband programming packages. Many U.S. cable operators now count more on broadband for rapid revenue growth than on their traditional cable TV system operations.
But, in addition to this, many big cable operators have big stakes in their own growing online video services -- like Comcast’s Streampix. So that could be a Netflix competitor in the making.
While Hastings sees HBO Go -- and maybe HBO itself – as a competitor, Netflix has been viewed as a growing service for reruns of TV shows, not necessarily for movies. That is good and bad news.
Here's the good news: Netflix could provide its service as subscription video-on-demand to cable operators who now have mostly free video-on-demand services. The bad new comes from those reruns of shows that already air on TNT, TBS, USA or other places that have "NCIS," "The Office," "Law & Order" or "House."
Cable operators have had decades-long relationships with networks that, despite their push for original programming, still get big revenues from off-network broadcast shows. As such, Netflix could run into conflicts with existing deals, which would have to be reworked.
We might know who Netflix's competitors are now. But who will they be in a couple of years?