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Why Did Netflix Integrate with Comcast’s Xfinity X1 Platform?

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Netflix’s reasoning behind its integration with X1

In July, Netflix (NFLX) and Comcast (CMCSA) entered into an agreement to provide Netflix on Comcast’s Xfinity X1 set-top boxes. Netflix is expected to become available on the X1 later this year.

Netflix stated at the Goldman Sachs Communacopia Conference last month that the important part of the deal with Comcast is the convenience it will offer consumers. The company added that for pay-TV providers such as Comcast, it’s better for pay-TV providers to integrate OTT (over-the-top) services such as Netflix on their set-top boxes. That’s because it could keep pay-TV subscribers in the linear television ecosystem rather than subscribers cutting the cord on pay TV.

Netflix also clarified that it was “agnostic” when it comes to how a Netflix subscriber streams videos as long as it’s convenient for the subscriber and doesn’t provide a negative viewing experience.

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Charter Communications (CHTR) is another company that seems to be following Comcast’s lead when it comes to integrating Netflix on its video user interface. According to a September 21, 2016, FierceCable report, Charter’s CEO (chief executive officer) Tom Rutledge said at the Communacopia Conference that the company was still interested in integrating Netflix into the Spectrum Guide, its video user interface. Charter also said that currently, 57% of its pay-TV users are also Netflix subscribers.

Comcast’s rationale behind Netflix integration

Comcast explained its rationale behind the deal with Netflix at the Nomura Media, Telecom & Internet Conference in August 2016. It said it viewed the deal as beneficial for Comcast’s Xfinity X1 customers. It added that the deal would allow Comcast to offer popular content not only from Comcast but also from third-party sources such as Netflix.

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