Netflix (NASDAQ:NFLX) isn't afraid to make enemies with the broadband providers that it needs to get its service across, even after it strikes deals to improve connectivity. The leading premium video platform's latest battle is with Verizon (NYSE:VZ). Netflix is letting Verizon subscribers know when the telco giant is the one to blame for their slow streams.
"The Verizon network is crowded right now," reads a warning to Netflix streaming customers, according to Re/code. "Adjusting video for smoother playback."
The second comment is a euphemism for Netflix scaling back on the resolution quality to make sure that it loads at an acceptable pace. This wouldn't be such a big deal if Netflix and Verizon weren't partners. After all, Netflix began "ISP shaming" Verizon, Comcast (NASDAQ:CMCSK), and other broadband providers late last year by publishing average connectivity rates on a monthly basis. Comcast struck a Web traffic deal earlier this to improve the connections by working directly with Netflix, and Verizon followed suit in April.
Netflix went on to bash Comcast after the deal was already in place, and now, it's apparently picking on the leading mobile carrier. Verizon isn't taking the warning in stride.
"This is a PR stunt," a Verizon rep tells Re/code. "We're investigating this claim but it seems misleading and could confuse people."
That doesn't seem like an outright denial by Verizon -- pending the investigation -- but the bigger problem here is that these deals that Comcast and Verizon struck with Netflix to improve the quality of their streams aren't enough to solve the problem. "Hate the pipe, not the player" may be Netflix's stance, but are we sucking up too much bandwidth for ISPs to handle?
Netflix will probably never be friends with the ISPs. Some, like Comcast, have ties to the cable giants that see Netflix as a threat to their programming cash cow. Netflix even took to its Twitter account to promote John Oliver's hilarious net neutrality rant (warning: explicit language) against broadband providers.
The market doesn't seem to mind that Netflix is making enemies with the same people it was shaking hands with weeks earlier, and needs them to deliver its streams. The stock that was last year's biggest gainer among S&P 500 companies led the way in May with a 30% pop. It's rolling. It had closed higher in 10 of the past 11 trading days -- and 15 of the past 17 sessions -- before closing lower yesterday.
This fight isn't finished between Netflix and Verizon. It may never be done.
Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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