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Netflix and Comcast Sign Deal: Is 4K Streaming a Factor?


From the Buzz & Banter: To ensure users can get 4K consistently, ISPs will have to pave the way -- and that costs money.

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On Sunday, Comcast (NASDAQ:CMCSA) and Netflix (NASDAQ:NFLX) issued a press release with the curious title "Comcast and Netflix Team Up to Provide Customers Excellent User Experience."

The two companies are forming what they're calling a "mutually beneficial interconnection" to ensure that Comcast customers will have access to high-quality Netflix streams.

Though terms were not disclosed, the presumption is that Netflix is forking over some dollars to alleviate a slowdown in streaming speeds over Comcast's network.

You can see in the screen grab below (Comcast in Green, Google (NASDAQ:GOOG) fiber in purple for comparison) that Comcast users have seen a slowdown in recent months, which could be problematic for people binging on season two of House of Cards.

Click to enlarge

It's understandable that Comcast wants to get paid, as Netflix generates 32% of downstream Internet traffic in North America, according to Sandvine. I've held the opinion that Netflix's popularity with consumers would allow it to escape from being forced to make these kinds of deals, but that's out the window here because Netflix hasn't announced a price hike.

I suspect that the coming emergence of 4K streaming on Netflix Instant is a factor here, because we're talking about a massive increase in data traffic per stream -- possibly four to eight times that of a 1,080P stream.

And the way it works now, depending upon issues like the strength of your Internet connection to how many people are accessing the network simultaneously, you actually don't have any guarantee you can even reliably get 1080p.

To ensure users can get 4K consistently, the ISPs will have to pave the way, and I guess that costs money.

Twitter: @MichaelComeau

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