Netflix Makes Deal With Comcast To Serve Content Directly

23 February 2014

Wall Street Journal:

Netflix Inc. has agreed to pay Comcast Corp. to ensure Netflix movies and TV shows stream smoothly to Comcast customers, a landmark agreement that could set a precedent for Netflix’s dealings with other broadband providers, people familiar with the situation said.

In exchange for payment, Netflix will get direct access to Comcast’s broadband network, the people said. The multiyear deal comes just 10 days after Comcast agreed to buy Time Warner Cable Inc., which if approved would establish Comcast as by far the dominant provider of broadband in the U.S., serving 30 million households.

Paying Comcast for peering access sets a precedent for Netflix to pay other providers to do the same. Netflix has tight margins — they can’t afford to pay every ISP to open peering agreements. They are standing on shaky ground.