Reports are surfacing that have Netflix and Comcast putting their rivalry over user eyeballs behind them and instead becoming partners in streaming television entertainment. This would be an abrupt about-face considering the recent battles between the two companies.
Netflix, and related network operators, have been at odds with several ISPs (internet service providers) for many months. Comcast, Time Warner Cable, and Verizon have been thought to be acting on the worst features of recently weakened net neutrality rules and slowing the traffic of rival content providers, including Netflix.
The recently announced takeover deal, in which Time Warner Cable would become a part of Comcast, has only served to heighten the tension and apprehension in internet content delivery. Netflix performance on Comcast networks has been reported to be degraded for many weeks, but Comcast may now have a good reason to partner with Netflix. Financial and industry regulators are sure to be keeping a keen eye on Comcast until the purchase of Time Warner Cable is finalized. Patterns of behavior indicating monopolistic tendencies are not likely to reflect on the company favorably.
Netflix has had success with some ISPs using special methods to improve the streaming experience for its customers. “Peering” allows streaming data to be directly shared with the consumer ISP without any intermediaries. “Caching” refers to video data being held on servers inside of the ISP’s network, which noticeably improves performance. Not all ISP’s have agreed to the use of these methods on the networks they control, and some have made the collection of fees from Netflix a requirement for getting their data closer to customers.
Any deal between Netflix and Comcast may involve peering, caching, or a combination of both methods to improve their partners streaming of content.
The question remains, no matter what the technological solutions looks like, why would these two companies decide that cooperation is better than competition? It could be that they’ve realized that some of the services they offer are really complimentary.
Cable relies on controlling access, not only to the network but on what is offered through the network. Consumers select a package and then pay monthly for access to the content of their selected package, along with additional fees for premium channels.
Netflix relies on open access – users pay a small fee and can watch as much as they want of everything the service has available. Younger viewers, future costumers of cable providers, are accustomed to this freedom.
Comcast may be aware that the hardware they control, which is required for delivery of this content, has on-going value, but their software (access to programming content) is falling out of favor and they are likely to become nothing more than commodity bandwidth providers if they don’t break free from the old model. In fairness, the model is mostly handled to them by legacy content providers.
Netflix, too, may be more cooperative in negotiations with ISPs as a result of the recent decisions handed down by courts undermining network neutrality laws. These laws are intended to prevent ISPs from blocking or “throttling” (intentionally slowing down) third-party traffic. As a condition of their takeover of NBC Universal in 2011, Comcast must still operate in accordance with those net neutrality rules, until 2018. Four years is still plenty of time for Netflix to completely dominate as a market presence. Comcast may rather be with them rather than against them.
Not many thought these two powerhouse companies would become partners in streaming, at least not so rapidly, but as Netflix learns more about how dependent they are on a reliable delivery channel and Comcast accepts how out of touch they are with audience expectations, maybe another deal is in the making?
By Brian Ryer