Netflix has struck a new agreement with cable giant Comcast, according to Bloomberg, which reports that the aim of the deal is to ensure speed and reliability for the Netflix streaming service.
The companies agreed on a multiyear accord that was announced in a statement, although it didn’t disclose the terms.
“Faced with complaints about quality and speed, Netflix agreed to pay Comcast millions of dollars annually to deliver its content more efficiently," the story reports, citing a source who’s familiar with the matter. The source asked not to be identified because the terms of the deal are private.
Other companies, including Google, already pay Comcast to ensure access to content delivery. “The agreement is a surprise because Netflix could have used the issue as leverage while Comcast attempts to acquire Time Warner Cable Inc.,” the piece notes.
“I would have thought Netflix would have held out with the Time Warner Cable deal looming,” Craig Moffett, founder of research firm MoffettNathanson LLC, said in an interview. “Netflix can ask for whatever it wants and has a reasonable shot at getting conditions put on the merger that could provide it with long-term benefit. On the other hand, that could be precisely what spurred this deal — that Comcast was willing to settle with Netflix for a relatively low price to make the Netflix problem go away ahead of the regulatory review.”
Netflix declined to comment beyond the statement, the story says.
The report adds: “Because so much traffic occurs during prime-time viewing hours, some Netflix users reported seeing grainy or jittery video. By connecting Netflix content directly to Comcast’s network, the new delivery method removes a middle layer, speeding the video to the end-user.”