Peter Kafka

Recent Posts by Peter Kafka

Here’s What a Netflix-Cable Deal Could Look Like: The One That Netflix Just Announced With Apple

The new Apple TV is a fairly incremental technical upgrade. But the refresh also includes at least one interesting business deal: Apple will let users sign up for Netflix directly from the device, and will let them pay for the monthly streaming service using their iTunes account.

That’s the first time Netflix has handed off its customer billing to a third party. And it’s a significant step for Reed Hastings and company.

For starters, it will make it that much easier for Netflix to sign up more users. But it also sets up a model for a possible Netflix-cable provider deal.

Reuters reported yesterday that Hastings was looking to bundle his service with pay-TV operators, and to deliver movies and TV shows through cable providers’ set-top boxes. But people familiar with his thinking tell me the Apple TV model is a more plausible tie-up: Netflix would be happy to let cable operators take care of billing, but wants to send its video over the Web, just like it always has.

That assumes that the cable guys buy the argument Hastings has been making for some time — that his service isn’t for cord-cutters, but for people who like watching lots of video, and don’t mind paying another $8 for what is essentially another cable channel.

How much would Netflix be willing to pay to let a third party market its service and take on billing duties as well? I don’t know.

But I have a hunch that that it’s less than the 30 percent per month that Apple has previously required from subscription services that want to let users sign up via its iOS devices.

One hint: Though you’ll now be able to sign up for Netflix using Apple TV, you still won’t be able to do that with Apple’s iPhones, iPads and iPods. Those devices will still require you to sign up somewhere else before you can stream video on their screens.

Worth noting that Netflix isn’t the only outside service handing over billing to Apple. Major League Baseball is doing the same thing with its app, and presumably we’ll see more down the line. Curious to see if Hulu Plus joins in.

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The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo.

— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald