Netflix CFO Says Comcast Deal Was Needed To Improve Subscriber Experience

Netflix had to make its potentially netflixgame-changing new deal to pay Comcast for improved service over its broadband lines because “there were some choke points around peak usage times,” the streaming service’s CFO David Wells said today at the Morgan Stanley Technology, Media and Telecom Conference. That should ease now that the agreement — Comcast new logowhich eliminates intermediaries handling Netflix traffic to Comcast — will “shore up the long-term subscriber experience.” Some investors are concerned that the arrangement might become costly. But Wells says not to worry: the additional outlays won’t change its forecast for fatter profit margins in its U.S. streaming business this year. The amount Netflix will pay Comcast “was incremental, but not to the point where we’re changing that.” Nor is he concerned that other broadband providers will now insist on large payments to improve Netflix transmissions. Others “could” ask for a similar deal, and the company is “somewhat caught in the middle” because it wants to ensure “a long-term subscriber experience” that will require more bandwidth as it offers more HD and, soon, 4K transmissions. Still, “not all ISPs are created equal,” Wells says, and “we’re not going to be interested in doing anything that will meaningfully change the economics.” (more…)

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