BUSINESS

Netflix Canada Could Be Bundled With Cable TV; Competition Could Soon Be On The Scene

05/09/2013 10:01 EDT | Updated 07/13/2013 05:12 EDT

Online streaming service Netflix has big cable companies trying to capitalize on its success, with some looking to either include it in their cable bundles or develop their own alternatives.

Instead of being viewed as only a threat to the cable TV business, Netflix could be bundled in with TV packages, Telus CEO Darren Entwistle said last week.

Telus has "no regrets" about not owning any media or broadcast assets to provide the telecommunications company with content for TV, smartphones and tablets, Entwistle said after the company's annual meeting.

"It's a threat, but it's also an opportunity for us without a shadow of a doubt," Entwistle said of U.S.-based Netflix which has about two million Canadian subscribers.

"We could potentially bundle Netflix as a part of a Telus solution. We could perhaps buy it on a wholesale basis and brand it accordingly," he said in an interview. There's also nothing stopping Telus from developing over-the-top applications to compete with Netflix, he added

Nearly two million Canadians have signed up for Netflix since 2010, according to tech blogger Peter Nowak.

A number of Canada's TV providers are offering on-demand services or developing platforms to compete with the online streaming service.

Bell wants to buy Astral Media in a revised $3.4-billion deal to use the shows and movies from the Montreal-based specialty, pay TV and radio company to compete with Netflix and other Internet-based TV and movie providers.

(Bell CEO George Cope told The Canadian Press Friday the company will abandon its plan to buy Astral if the Canadian Radio and Television Commission (CRTC) forces it to sell off The Movie Network and some of its other channels which Bell believes would give it a competitive edge.)

Rogers also wants to develop a Netflix alternative, according to Nowak, but is waiting to see how a dispute between Astral and Quebec TV company Videotron, which started their own version of Netflix called Illico Club Unlimited, plays out.

Entwistle said it's important that Telus have a game plan to deal with Netflix and similar competitors.

"If there are really people that want a subscription model for second-generation movies, why not us offer that and make it part of our package? " he said.

"I would like to do to really try to differentiate us from the competition, from the Netflix of this world in a meaningful way."

Entwistle also said that consumers want more flexibility when it comes to choosing their TV channels.

"I think consumers only want to pay for what they want to view. The fact that, that should be viewed as a radical concept is a bit frightening."

Although Netflix's success has big cable companies trying to compete, they shouldn't worry about becoming obsolete, writes Derek Thompson in The Atlantic.

"[Netflix is] still a complement to, not a substitute for, the behemoth of the cable bundle, because it doesn't have the keystone that holds the whole thing together: live sports."

Entwistle, who has been CEO of Telus since 2000, said he sees plenty of growth left at his company within Canada with wireless, high-speed Internet, TV and electronic health-cares services. He isn't looking outside the country at this point for growth.

"If you don't have a highly robust domestic foundation, your international expansion plans will be problematic. And so for me, I would like to fulfil our growth destiny, so to speak, within the Canadian franchise."

Entwistle said acquiring one of Canada's new wireless entrants isn't a necessity. Public Mobile, Mobilicity and Wind Mobile are all expected to be sold.

"Telus doesn't need to do any acquisitions to realize its strategy. It's not a must-do situation. It's very discretionary."

With files from The Canadian Press

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