Comcast Deal Won’t Harm Netflix’s Business Model

While acknowledging that Netflix’s new transit deal with Comcast will result in some new incremental costs, those costs won’t be enough to alter the video streaming giant’s economic models, Netflix CFO David Wells said Monday at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.

“The deal, in terms of the cost…it was incremental, but it wasn’t incremental to the point where we’re changing [guidance],” Wells said, noting earlier that Netflix is sticking with “our guidance on 400 basis points year-on-year margin improvement for the U.S. streaming business. So you are hearing me confirm that nothing has changed there.”

He said it was important for Netflix to do the deal because it ensured that Netflix subs who get broadband from Comcast will get a good experience over the long-term, noting that there were “some choke points around peak usage times” before Netflix inked the deal.

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