NEW YORK (AP) — Netflix has reached a deal with Comcast
to ensure that its TV shows and movies are streamed smoothly to
households, the first deal the online video streaming service has
reached with an Internet service provider.
The two companies said
in a joint statement Sunday they’re establishing a more direct
connection to provide a better service to customers that will also allow
for future growth in Netflix traffic. The companies say the arrangement
is already giving customers a better experience.
Netflix had 33
million U.S. streaming subscribers at the start of the year and accounts
for about one third of all traffic at peak times on the Internet,
according to research firm Sandvine. As the video steaming company has
grown, Internet service providers like Comcast have pushed the company
for more structured deals to enable its content to be transmitted
smoothly and reduce the strain on their networks.
While the
companies did not disclose the terms of the deal, Netflix investors will
want to know how much this deal will affect the company’s bottom line
and whether the costs will be passed on customers. Netflix has been
resisting paying fees to Internet companies and this deal could open the
door to similar agreements with other providers.
Netflix is
already experimenting with different rate plans that charge slightly
more for households that want to stream its shows and movies on four
different screens simultaneously.
The deal comes after months of
collaboration with Comcast though Netflix will receive no preferential
network treatment under the multi-year deal, the statement said.
Comcast
was ranked as the 14th fastest Internet service provider in January,
according to a table on Netflix’s website. By connecting directly to
Comcast’s network, Netflix should be able to boost the quality and speed
of its video streaming as it adds more customers and prepares to start
streaming its content in the ultra high definition format this spring.
Other large Internet companies such as Google already pay broadband providers a fee to enable more direct
connections.
Comcast
is the nation’s number-one pay TV and Internet provider under its
XFINITY brand. The company said earlier this month that it had agreed to
acquire Time Warner Cable for $42.5 billion in stock.
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AP Business Writer Michael Liedtke contributed to this report.
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