#3: DIRECTV to Buy Netflix
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
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,
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, 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
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