Netflix is said to be in talks with top U.S. cable operators with regards to allowing its online service to appear as an app on set-top devices.

Though a partnership between cable operators and streaming services is something cable providers used to frown upon, Comcast, Time Warner Cable, AT&T and Verizon are said to be considering Netflix’s offering.  The deal will allow cable subscribers to watch programming on demand, older shows that are no longer available in networks offered by the cable operator, and even serve as the go-to place for network blackouts.

If the deal pushes forward, it will be the first of its kind between cable operators and an internet streaming service in the US.  In September, Netflix and UK’s Virgin Media signed a deal similar to the proposed US deal, making Netflix available to Virgin subscribers.

New set-top boxes these days are now internet-capable, and so having apps such as Netflix on board will allow subscribers to be able to enjoy more programs when they want to.

Though this may sound like good news for cable subscribers, there’s no assurance that the deal will go forth.

Can A Deal Be Struck?

According to sources, cable service providers still worry that allowing a Netflix app on their set-top boxes would give the streaming service a great leverage in.  There’s a huge chance that Netflix will sell pay-TV subscriptions that the cable provider itself offers.

Another reason is that it might entice cable subscribers to drop their subscription when they see that they can watch almost all of their favorite shows on Netflix.  If this happens, cable subscriptions will plummet and subscribers would just opt for a Roku, or an Apple TV or any other internet-connected set-top box in place of a cable subscription.  But sources claimed that cable operators are now seeing things differently, because having Netflix will entice more people to subscribe to their cable offerings.

The third reason, and probably the main snag as to why cable operators are still not signing a deal with Netflix is that the streaming service wants cable operators to use a technology that would boost the quality of streaming videos.  The technology is part of the Open Connect program that allows ISPs to directly connect to their networks for free. Netflix wants to use its own servers and directly connect into broadband providers’ networks as the company believes it will be crucial in delivering the best quality of programs to viewers.

The cable providers do not want to grant this to Netflix, as it could cause future problems with other streaming services that would want their own apps on new set-top boxes.

Though Netflix aims to be seen as the perfect complement app to cable set-top boxes, cable providers may still see them as big competition.  Though this may be an enormous wall blocking Netflix’s journey to cable set-top boxes, Netflix Chief Financial Officer David Wells said during a recent conference call that they would “love to reduce the friction to the end consumer” by being available on cable set-top boxes, reports Reuters. But in order to do that, the cable providers need “to decide how much of a competitor they view us as or a complement.”

Follow along as we build out our Online TV News collection on Springpad. Stay current with all of the news+trends.