Netflix, Inc the largest subscription service in the world for video streaming joins behemoths such as Facebook and Google that already pay Comcast for their content delivery network access.
The video streaming service agreed it would pay for access that will be more direct to the broadband network of Comcast to improve reliability and speed for its customers of video streaming according to people close to the situation.
The two companies announced an agreement that is multiyear in a statement that was issued on Sunday that did not disclose terms.
Faced with a number of complaints over speed and quality, Netflix will pay millions of dollars to Comcast each year to deliver content more efficiently, said a person close to the matter.
The agreement is somewhat of a surprise since Netflix could have used this issue as a form of leverage while Comcast tries to purchase Time Warner Cable, said one researcher in the industry.
The agreement will be part of the effort by providers of broadband to collect new fees in the millions of dollars from providers of content, who are increasingly using networks on the Web for the delivery of sports, live programs and movies to televisions, computers and tablets.
Analysts said this deal would confirm that if you were a video business that wants to get your content from your company to your customer through broadband, you would need to pay a price for it.
As of early trading in Europe, Netflix was ate $433 and in morning trading in New York the stock was up over $12 to $444.
Netflix did not comment beyond its first statement. Comcast based in Philadelphia had over 30 million subscribers to broadband and provides Internet to close to 23% of the households in the U.S. Netflix has over 51 million customers worldwide.
Because there is a tremendous amount of traffic occurring during prime time, some users of Netflix reported viewing jittery or grainy video.
By connecting its content to the network of Comcast, the new method of delivery by Netflix removes a middle layer, which speeds up the end product for the user.
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