Late yesterday Reuters reported that Netflix will pay Comcast for faster broadband speeds, a first for the largest subscription-based streaming service that has long capitalized on hogging bandwidth, especially with its HD formats, without having to pay internet service providers a toll. That seems to have caught up with Netflix, as customers complained to their providers about slow internet speeds and poor quality video. Now Netflix will pay Comcast for wider bandwidth, and although neither party disclosed financial details, we do know that Netflix will stream through Comcast’s own network directly rather than through a third party.
This could change things industry-wide, as bandwidth usage has been well guarded by providers such as AT&T and Verizon. You may find similar interconnect agreements announced soon, as Netflix subscribers continue to increase. Just last month, Netflix announced gain of another 2.3 million US subscribers in the fourth quarter of 2013, and 1.7 million international subscribers.
The agreement follows Comcast’s purchase of Time Warner Cable, making it the largest multi-service TV provider in the US with the addition of approximately 8 million subscribers from TWC.
Netflix, the largest SVOD provider with 44 million subscribers worldwide, is far ahead of Amazon’s Prime Instant Video service, although Amazon’s upcoming merger of its UK-based LOVEFiLM with Prime will increase its subscriber base.
Later today, both AT&T and Verizon made it known they were also in talks with Netflix to provide better bandwidth for subscribers, although the financial aspects of the discussions were not revealed.