Credit: Shutterstock photo"We all want a faster, better internet," said Netflix, Inc.NFLX as it launched its latest tool- Fast.com that measures the network speed of a private connection, be it mobile or broadband.
While one wonders what value it would add to Netflix when there are numerous other products that give the same statistics, it does seem to be an important step in the company's big plan.
Data Speed Matters
Internet speeds have been a key concern for Netflix as it is directly linked to the quality of video consumed. At the same time, high speeds lead to increased data consumption and therefore, increasing data costs, which are a deterrent to the growth of its user base.
As such, in the past, Netflix has had tiffs with several telecom providers over their efforts to collect fees to create fast lanes for those services that consume more data. If this became the practice Netflix would have to pay for good data speeds, which would hurt profits. This led it, along with several other Internet service providers to advocate net neutrality. Fast forward to the present and you see the company taking a unilateral decision to cut streaming speed to 600Kps in order to curb data bills for its customers.
And that isn't all. Netflix is also included in the 'Binge On' initiative from T-Mobile, which exempted it along with some others from its customers' monthly data cap. This actually gave Netflix an edge over other streaming peers like Alphabet's GOOGL YouTube which wasn't offered the same privilege. YouTube thereafter took the matter to the EFF, which got the FCC to look into T-Mobile's practices. This is what led Netflix over to look for other ways to serve its data-sensitive customers.
How Does Fast.com Help?
To overcome this problem, a few months back Netflix came up with a data- saver solution that allowed users to control their streaming quality, if required. Besides, Netflix already has an ISP Index that measures the average data speeds across countries and providers on a monthly basis and during prime time hours. However, this was not enough as users could not get the required information in real time.
Through Fast.com, users will get real time data speed as offered by their Internet service providers. Netflix, it seems, is attempting to increase transparency so that users know when they are unable to stream due to connectivity problems. The company's blog said that "When you're experiencing streaming issues, fast.com allows you to check the download speeds you're getting from your Internet service provider." So the ball is clearly in the telecoms' court now.
Going ahead, we expect that Netflix will link this commercial-free website to its own platform and app as well. In addition, there are talks regarding a downloadable software version of the service to be made available in the future.
To Conclude
Fast.com will likely be a key tool for Netflix in the future, especially when it comes to its relations with telecom providers. Moreover, it does give users enough flexibility to view their favorite Netflix programs while keeping a tab on their connection costs.
At present, Netflix has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader technology space include Paylocity Holding Corp. PCTY and NetEase, Inc. NTES , both sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NETFLIX INC (NFLX): Free Stock Analysis Report
NETEASE INC (NTES): Free Stock Analysis Report
ALPHABET INC-A (GOOGL): Free Stock Analysis Report
PAYLOCITY HLDG (PCTY): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
