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2013 Predictions
Prediction #3: DIRECTV to Buy Netflix
By Swanni

Washington, D.C. (December 30, 2012) -- Editor's Note: Swanni today is making his annual predictions for TV technology for the upcoming year. To see all 10 forecasts for 2013, click the Home Page of TVPredictions.com.

Okay, this prediction has a big obstacle facing it before it even gets out of the gate. In my first prediction, I said Dish would merge with...someone...with that someone possibly being DIRECTV. If Dish and DIRECTV decide to merge, my third prediction will be DOA.

However, if DIRECTV and Dish do not merge, I predict that DIRECTV will buy Netflix.

Considering that Netflix next year will face even tougher competition from such heavyweights as Amazon, Intel, Redbox/Verizon, Walmart's Vudu and Hulu, the company could use a lifeline, perhaps before it's too late.

The idea of a Netflix/DIRECTV partnership has been floated before. In fact, the author of this article has predicted the satcaster will eventually use Netflix as a VOD service. But the most recent hint the two companies may join together comes from a source who knows DIRECTV better than almost anyone: John Malone.

Malone, who once served as DIRECTV's boss when his Liberty Media company owned the satellite service a few years ago, was being interviewed by Multichannel News last October on a range of topics when the subject of Netflix came up.

The industry veteran was asked if Netflix could compete directly with cable operators. Malone noted that the studios and programmers are reluctant to offer Netflix more content and he added that Netflix's business model may not 'really work.'



But Malone then dropped a bombshell of an idea, which if it came from anyone but him might be dismissed as mere speculation.

"If DIRECTV was to acquire Netflix, it would give them entree really to all the footprint that they don't have, plus their combined programming budget would be a monster," Malone told Multichannel News' editor in chief Mark Robichaux. "And they could also drive Netflix in Latin America. That would be a combination that to me makes a certain amount of financial sense."

For DIRECTV, the deal makes sense because it's having a difficult time persuading its subscribers to connect their set-tops to the Net. As this point, only about 10 percent have done so. The reasons why are varied, but the biggest problem is that DIRECTV does not offer an Internet service, nor does their set-tops have a simple Wi-Fi feature. To put it nicely, it's not easy for the average DIRECTV owner to make the connection.

So to get its subscribers to go through the trouble of connecting their set-tops, DIRECTV needs to offer something compelling enough. And that's where Netflix comes in. While DIRECTV now offers a downloadable VOD service called DIRECTV Cinema, Netflix has a cachet that DIRECTV Cinema does not. If DIRECTV offered Netflix's streaming VOD service, its subscribers might be more likely to connect.

See Swanni's Prediction #4

What do you think? Offer your comments below!

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