Netflix (NASDAQ:NFLX, news, filings) offered an update on the content delivery network it started work on last year, which goes by the name "OpenConnect". It places caches deep within last mile networks in an effort to give them better control over both quality and traffic management in order to defuse some of the usual OTT friction. They seem to be making substantial progress in winning over last mile operators, and today claimed Cablevision as a new convert.
Netflix's video traffic is so big a piece of the internet already that managing it directly has become a job all its own. Netflix used to send all its video bits via the likes of Level 3, Limelight, and Akamai, but any content provider that reaches scales of this sort inevitably moves more and more of it onto its own platform. Of course, they're still buying infrastructure services to make it happen, just different services. It's interesting though that they're still depending so heavily on Amazon for cloud services while bringing the network more in-house.
Also on their partner list are Virgin Media, British Telecom, Telmex, Telux, TDC and GVT. That's a good start, but the hard part will be where the content/peering conflict is burning hottest - i.e. with Comcast and over in France with Free, FT, etc. It's a long road ahead still.
Netflix is also now offering what it calls SuperHD quality to those of its customers with ISPs who are hooked up to Open Connect. Clearly they're looking to enlist their subscribers' help in getting last mile providers to sign on.
I wonder what the economics of the service look like, i.e. who is paying for what etc. Anybody know?
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