Netflix (NASDAQ:NFLX) signed an agreement with Comcast Corporation (NASDAQ:CMCSA) that would allow customers to stream the video contents from both companies on the X1 platform.
In a statement, the companies explained that the agreement was to “incorporate Netflix into X1, providing seamless access to the great content offered by both companies.”
The online video streaming company and the cable operator said they still “have much work to do before” before the service become available to consumers later this year.”
Netflix has similar arrangement with other cable operators
Sources told Re/code that Netflix’s agreement with Comcast was similar to its arrangements with other cable operators in the United States and overseas. Comcast will integrate the Netflix app on X1 platform that would allow customers to sign into their account easily and watch videos.
The online video streaming company has similar deals with Apple (NASDAQ:AAPL), Roku, and Google’s Chromecast. The Netflix app is also integrated on smart televisions.
Morgan Stanley previously suggested the possibility of such agreement between the companies. The firm’s analyst, Benjamin Swinburne said, “We would expect Netflix to give up some economics, similar to other distribution partners like Apple or TiVo but we do not believe it would meaningfully alter the direction of Netflix profits over time.”
Market observers believe that agreement is beneficial for both companies. Comcast steps closer to achieving its goal of providing entertainment options to customers including traditional cable TV and online streaming services through their subscription.
On the other hand, Netflix will gain access to the cable company’s 22 million video subscribers, who are toggling between cable and web-connected devices to watch the shows offered by the online video streaming company.
Additionally, the agreement shows that the relationship between online streaming company and the cable operator improved. Netflix objected to the proposal of Comcast to acquire Time Warner Cable (NYSE:TWC). Regulators decided not to approve the deal. Its CEO Reed Hastings also criticized Comcast for charging his company to guarantee that its subscribers can stream videos without interruption.
Separately, the online streaming company announced a new multi-year licensing agreement with CW Network to remain the exclusive U.S. subscription television service for previous seasons of scripted broadcast on CW such as “Super Girl and DC’s Legends of Tomorrow.”