Analyst accuses Netflix of telco, content industry ‘shakedown’
Details
Editor
| 25 October 2014
In a withering attack on the SVOD leader, analyst Strand Consulting has accused Netflix of using double-talk, including ‘bogus’ speed index claims, to cement its market position.

NetflixOrangeIn its research note, the analyst, which has always been a staunch defender of net neutrality, accuses Netflix of hijacking net neutrality for its business advantage and asserting that that there has always been more to Netflix’s success in being the world’s leading on-demand over the top (OTT) video service than "good content and cool technology". Indeed it asserts that Netflix has played a shrewd PR and policy game to paint itself as the fragile underdog to regulators, journalists and the public while it fiercely lobbies for regulation against the telecom and content industries.

Strand observed that in its recent third quarter financial letter to shareholders, Netflix has managed to build a successful, profitable and growing business on top of networks owned by broadband providers which, says Strand, it “so maligns.”

More damningly though the analyst says that a key part of the Netflix strategy is the firm’s ISP Speed index, which it slams as “bogus” and “nothing more than a shakedown tactic to cajole operators to participate in its OpenConnect content delivery network (CDN).” Strand further accuses Netflix of using the index as a potent lever in the high-stakes game of public opinion and policy, such as helping it win a favourable baseline when it launches in a new country. Strand cites the case of Telenor in the Norwegian launch of the SVOD service.

Concluding its attack with accusations of having a disruptive effect on the content industry, fiscal dumping and “an unforgettable display of insolence” at a regulatory hearing in Canada, Strand says that Netflix is not a company in need of corporate welfare and that it was time to stop its “abuse” of the political and regulatory system.