NEW YORK – 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 streaming 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, 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 to customers. Netflix has been resisting paying fees to Internet companies, and this deal could open the door to similar agreements with other providers.
The deal comes after months of collaboration with Comcast though Netflix will receive no preferential network treatment under the multiyear deal, the statement said.
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.