Netflix Exec Reveals Why the Deal With Comcast Had to Be Done — It’s All About ‘Choke Points’

Mar 4, 2014  •  Post A Comment

Netflix Chief Financial Officer David Wells told attendees at an investor conference that the company’s deal to pay Comcast for improved broadband service was necessary because “there were some choke points around peak usage times,” Deadline.com reports.

The deal will “shore up the long-term subscriber experience,” Wells said at the Morgan Stanley Technology, Media and Telecom Conference.

Some investors are worried the agreement could prove costly for Netflix, but Wells downplayed those concerns, according to the report. The executive said the expense won’t change the company’s profit margin forecast for the year, the story reports.

Wells added that the amount Netflix is paying Comcast is “incremental,” and that he’s not concerned that other broadband providers will ask for bigger payments. “We’re not going to be interested in doing anything that will meaningfully change the economics,” he said.

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