This is Lowpass by Janko Roettgers, a newsletter on the ever-evolving intersection of tech and entertainment, syndicated just for The Verge subscribers once a week.
If you’re in the market for a new TV, you’ll have plenty of different options these days, ranging from display technologies (OLED vs. QLED vs. micro RGB) to styles (shiny home theater displays vs. matte art TVs) to operating systems (Roku vs. Google TV vs. Tizen vs. Fire TV).
However, you’ll find that all these different TVs still have something in common: Every TV comes with a remote that has a Netflix button, and most will feature the Netflix app prominently placed on the homescreen, usually in the first spot of the TV’s homescreen app rail.
That’s no accident: Netflix has long forced TV makers and smart TV platform operators to follow strict guidelines if they want to ship their devices with its app. A lot of these rules are technical in nature, and meant to ensure that Netflix runs without hiccups on any device certified by the company. Others seem more designed to cement the company’s market position, and prevent Netflix content from drowning in a growing sea of streaming titles from other services.
Device makers have little choice but to accept those terms. Netflix is responsible for 19 percent of all streaming in North America, and its app is the second-most-popular app on smart TVs after YouTube. That makes the Netflix app a must-have, as shipping a device without it would be commercial suicide.
Now, some smart TV industry insiders are wondering what this all means for Netflix’s acquisition of Warner Bros. and its HBO Max service. Will Netflix extend its requirements to the HBO Max app and its content, perhaps through an HBO-branded remote control button? Or could regulatory pressure, and Netflix’s desire to get the deal done despite a competing bid from Paramount Global, force it to ease up on some of its policies, and for instance give TV makers more access to its data?
Netflix declined to comment on specific aspects of integrating the two services when contacted for this story.
Netflix’s deals with TV makers, including the requirements to get devices certified as “Netflix Ready,” are not public, and protected by nondisclosure agreements. However, some of these terms have been disclosed by Netflix and its hardware integration partners, while others have been common knowledge among smart TV industry insiders for years.
Here’s what’s generally thought to be part of the certification rules:
- Netflix-ready devices need to follow a detailed set of technical requirements that include certain DRM technologies, codecs, and more.
- Netflix also requires device makers to have a Netflix button, featuring the company’s logo, on their remote controls. (Apple appears to be the only company exempt from this policy.)
- Netflix’s app requires prominent placement on a TV’s homescreen. For instance, the Netflix Self Serve device certification program requires that the app is placed “as the first item in the rail on the initial launcher screen, with a fully visible icon and adherence to Netflix brand guidelines for cards and colors,” according to UniqCast, a company that helps operators to integrate Netflix into their devices.
Netflix has also long restricted the data it shares with smart TV operating systems, and the way these platforms can use that data to make content recommendations. While the exact terms are again confidential, the results are obvious to consumers, especially if compared to apps like HBO Max. Some examples for this:
- Google TV devices show various content recommendations directly on the device’s homescreen, with dedicated rows for comedies, award-winning movies, and more. Consumers can dig in deeper and browse dedicated pages for genres like action, romance, and adventure. None of these recommendations include Netflix-exclusive titles.
- If you ask your Fire TV stick with your remote’s microphone button for an HBO Max or Disney Plus show, it takes you to a detail page that also includes viewing recommendations for similar shows on other services. Do the same for a Netflix show, and the device opens the Netflix app.
- Roku users are able to save HBO Max shows to their Roku watchlist. The same is not possible for Netflix movies or shows.
Finally, Netflix has very specific financial agreements with TV makers that often differ significantly from those of other streaming services:
- Companies like Roku have gone on the record revealing that Netflix does not share any material subscriber revenue with them. These platforms typically get a cut from other streaming services.
- HBO Max has agreements with companies like Amazon to resell its service through their own subscription marketplaces. Netflix has declined to participate in such “channel stores.”
Netflix has called HBO Max a “a compelling, complementary offering for consumers,” and indicated that it wants to “maintain Warner Bros.’ current operations.” With that, we should expect that the company will keep the HBO Max service alive for some time to come. Both apps will definitely continue to be available separately until the deal closes.
However, industry insiders I have talked to doubt that the company is going to maintain two separate tech stacks in the long run. It’s more likely that HBO Max will eventually become an add-on or hub within the Netflix app, similar to the way Disney is unifying Disney Plus and Hulu. Netflix co-CEO Greg Peters has suggested as much in a recent interview with Stratechery. “We’ve got a bunch of subscribers to HBO, let’s say, the majority of those are subscribers to Netflix too, so we actually see that by putting these two things together, we can actually improve the offering for consumers,” Peters said.
Combining the two services together also could give Netflix even more power in its deals with TV makers, and perhaps lead to more restrictions on how HBO content can show up on your TV homescreen. The big unknown here is the regulatory process for Netflix’s acquisition of Warner Bros. The deal not only needs to be approved by US regulators, but also likely faces scrutiny from UK and EU competition authorities.
All this could force the company to soften some of its stances and effectively open up its walled garden. Perhaps you’ll one day even be able to add your favorite Netflix show to your TV’s universal watchlist.
