Can Netflix Continue This Bull Run?
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Netflix is an Internet subscription service that streams television shows and movies. The company’s subscribers can watch unlimited television shows and movies streamed over the Internet to their televisions, computers, and mobile devices. In the United States, subscribers can also receive DVDs delivered to their homes. Netflix has revolutionized the television and movie industry with its services.
Netflix has agreed to pay Comcast (NASDAQ:CMCSA) to ensure the subscription service’s movies and TV shows stream seamlessly in a deal that underscores the power of distribution in the digital era — and could mean higher rates for consumers. The nation’s leading online video service and the largest U.S. provider of home Internet access said the agreement is designed to ensure that Netflix subscribers can watch the new season of House of Cards and other content free of the pauses and hiccups subscribers have reported in recent months. The agreement may pave the way for similar arrangements between Netflix and other Internet service providers, including Verizon (NYSE:VZ) and AT&T (NYSE:T). Consumer advocates and technology policy experts reacted with concern over the ability of giant Internet access providers to extract payment from businesses wishing to reach people in their homes — and the likelihood the extra costs eventually would be passed on to consumers.
Netflix and Comcast declined to reveal terms of their pact, which was announced Sunday. But Wedbush Securities analyst Michael Pachter predicted that the cost of Netflix’s new deal with Comcast will one day be felt by the streaming service’s 33 million U.S. subscribers. Comcast will “raise the price to whatever the market will bear,” Pachter said. “This will ultimately compel Netflix to raise prices to consumers.” Netflix declined to respond.