Netflix Agrees to Pay Comcast to End Traffic Jam
February 24, 2014 10:00 AM
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While it's not clear how much Netflix is paying Comcast, the new deal will span several years
Comcast recently cemented its dominance as the top broadband provider in the U.S. after its planned acquisition of Time Warner Cable (TWC). And with a customer base that large, Netflix doesn't want to miss out.
, Netflix has agreed to pay the big cable provider to ensure that its movies and TV shows stream easily without traffic jams on Comcast's broadband network.
While it's not clear how much Netflix is paying Comcast,
the new deal
will span several years and Comcast said it would connect to Netflix's servers at data centers operated by other companies.
This means a less-congested streaming experience for Netflix customers using Comcast cable connections, and Comcast gets to collect fees for providing the service.
Before this agreement, Netflix wanted to connect its own specialized servers to the networks of big cable providers in order to improve streaming. But Netflix didn't want to pay for such connections, and big cable like Comcast wanted fees because they'd be
carrying Netflix's heavy traffic
So Netflix traditionally used middle companies for connections, but it had to pay these middlemen to do so anyway. There were also traffic congestion problems with this route, which slowed connections for customers. Netflix likely thought it made more sense to just give in and pay the big cable company (Comcast) for direct connections to its broadband network, and to ensure that Netflix content is delivered smoothly.
This is a big step between big cable and internet streaming companies, as it means Netflix is more likely to offer similar deals with other major cable companies.
earlier this month for $45.2 billion, serves 32 million households in the U.S. With the company having such a dominant position in the U.S. cable market, it could be a good idea for Netflix to jump onboard and please both current and potential customers with better service.
Netflix has over 30 million subscribers in the U.S.
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RE: Does it matter which company paid who?
2/24/2014 9:59:24 PM
I've been saying for years Netflix's prices are totally unrealistic long-term and it's all coming along nicely. First we'll get ads on Netflix to help foot the extra costs and increase profits, then they'll add several tiers of service with no ads and access to premium (newer) content. They HAVE to do it this way. Consumers will kick and scream and have conniption fits if they raise the upfront price, but taxation, the shrinking size of food at the grocery store (along with fancier, more wasteful plastic bottles!), the fremium game industry, subsidized phones, and the rise of Google make it crystal clear that the consumer is more than happy to be tricked out of their money. As long as the big bold numbers on the price tag look small, they're okay. Ignorance is bliss. What you don't know can't hurt you, etc.
Netflix is far too cheap for what it offers. They've already killed blockbuster and most local movie rental outlets. They've done their job. Now its time to return to equilibrium. The cost of making all this entertainment hasn't dropped, yet somehow people think its realistic they can watch as much content as they want for $8/mo forever, AND demand newer content to boot. LOL!
RE: Does it matter which company paid who?
2/25/2014 12:11:36 AM
First we'll get ads on Netflix
No, fuck that.
That would be the end of Netflix. EVERYONE would drop their subscription.
"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone
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