netflix broken heart

Netflix Pays Comcast, Ends Our Love Affair

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Oh Reed Hastings (that’s the CEO of Netflix, FYI), why hath thou forsaken us, the consumers who have supported you and yours through the years? We were here, standing at attention, ready to leap into the gaping maws of bloody combat at your command, but instead, you sued for peace and spent money to make sure your streams got through. It seems you’ve forgotten the power of the people and that millions of voices can tear down the sturdiest of walled gardens. We now fully expect that you will pass on that expense to us, abandoning us when we have been here all along ready to fight the good fight. Damn the Net Neutrality, Full Speed Ahead!

You Saw the Future and Strode Toward It

We, as savvy consumers of online video, know the travails you face in your fight to make a profit margin. The rising cost of licensing content from dinosaur broadcasters whose brains-in-their-tails finally started to realize the value of streaming video, forcing you to bleed green into their pockets. You saw the future and strode toward it while they were still staring up at the ball of fire streaking through their rarified atmosphere thinking that nothing could topple their gilded towers. We were right there with you, you upstarts, you rebels.

You worked to bring TV content online and to the masses equally for an equitable price without commercial interruption. You offered us a nigh endless buffet of streaming video content to wile away the wee hours when insomnia struck, you made movie night a living room event and you brought us a plethora of content that we might never otherwise have discovered. And you fought the good fight, calling shenanigans on the ISPs, the MSOs and the MVPDs with your regular reporting of streaming speeds. And then, you turned your back on it all and you paid to play, without even utilizing the armaments you had assembled (us, your loyal subscribers) and you opted for appeasement in its most pejorative sense. You fell into lock step with Chamberlain, and we all know how that turned out for him. It seems that Comcast may be thinking this very thing:

If ever that silly old man comes interfering here again with his umbrella, I’ll kick him downstairs and jump on his stomach in front of the photographers….

Comcast Payoff for the Masses

Good news everyone (well almost everyone, well really just Netflix users who are on Comcast’s network, well really just Netflix users on Comcast’s network who might have been having some struggles streaming Netflix), your problems are solved (sort of, but not really because it’s probably just the tip of an iceberg that will ultimately sink the Titanic of online video entertainment) and you will now be able to get those Netflix streams without problem (possibly, because it might just be that those problems were already inherent in Comcast’s potentially-oversold-in-terms-of-bandwidth network and had absolutely nothing to do with the amount of data that Netflix was streaming out to its subscribers on said network as everyone was just trying to use the bandwidth that they had been promised in the first place).

Or, in a nutshell, Netflix subscribers who have Comcast might breathe a bit easier as they will (probably) see less buffering because Netflix just paid Comcast a heaping sum to make sure that happened. Probably around the $400M mark as they just recently asked for that much more debt. You see, Netflix had been going about things quite smartly in the past, offering to basically put servers full of its content a hop, skip or small jump away from you all via Netflix Open Connect to help take some of the brunt off cross-network traffic.

ISPs can directly connect their networks to Open Connect for free. ISPs can do this either by free peering with us at common Internet exchanges, or can save even more transit costs by putting our free storage appliances in or near their network. Major ISPs around the world have already connected to Open Connect, including Frontier, British Telecom, TDC, Clearwire, GVT, Telus, Bell Canada, Virgin, Cablevision, Google Fiber, Telmex, and more.

Clearly, Comcast was ready to invade Netflix’s wallet from the get go and decided that instead of settling for some small tracts of digital landscape, it would try for entire world and has now prevailed and extorted money from Netflix, money that will most likely be passed along to the loyal subscribers sooner or later in the form of increased subscription rates or, Buddha forbid, content caps or even worse, network specific content availability.

Whatever Comcast Can Do, We Can Do Too

This is now going to be the mantra of all MSOs. Comcast currently has about 21 million-ish subscribers. That breaks down to (hypothetically based on that random $400M debt raise) $19 per subscriber. If the buyout of Time Warner Cable succeeds (which I now believe may be terrible for consumers) it will give them another 12.2M subscribers which might mean another $231.8M from Netflix. Meanwhile, Verizon (who loves lobbying for anti-consumer legislation along with AT&T) has 4.7M subscribers so might ask for $90M. Cox and AT&T have about $4.5 so they might ask for $85.5M each…and it goes on and on.

What I really dislike about it is, when/if Comcast does get Time Warner Cable, they will outstrip the second place MSO, DirecTV, by 13-15 million subscribers. If Comcast subscribers suddenly get preferential Netflix streaming, it could give Comcast/TWC an unfair market advantage in a country that was founded on principals of fair competition for all. Remember, Comcast is already majority owner of NBC Universal and a purchase of Time Warner Cable could further reduce the biodiversity of media in the U.S. and give them an even larger advantage as they will own everything from content creation and production and distribution to the networks and appliances that send that content to consumer homes.

So what’s to say they won’t start blocking the content of others simply because they own an entire pipeline of content that they want people to view? The FCC already proved inept in its regulation attempts when it approved the NBC Universal purchase by Comcast, not to mention showed that it was flat out bought and paid for when the then FCC chairperson took a high level position at Comcast, four months after that deal. So the only real questions that are left in all this are things like, when will Reed Hastings join Comcast or alternatively sell Netflix to them? Who from the FCC will join Comcast after the Time Warner Cable purchase is approved and how else will consumers end up getting screwed and pay in the end from all this?

Netflix paying Comcast might mean “peace for our time,” but that peace will probably come at a hefty cost to consumers. Mayhaps it’s time to end my Netflix subscription and start an Amazon Prime one instead. I guess our love affair is over, I suppose that sooner or later it had to be. Rebellion never lasts forever and sooner or later the rebels become part of the system, and sometimes, part of the problem. The next rebellion will be that much more difficult to begin because much deeper pockets will be needed to start it. The next Netflix may never emerge now that the current one has been neutered and showed that instead of standing up for its subscribers, it chose to appease the MSO that wants to rule the world. Then again, we all survived Chamberlain’s reign, so perhaps we shall survive this as well.


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