How Netflix's Business Model Got Turned Upside Down

NEW YORK (TheStreet) -- Netflix (NFLX) shares were jumping, gaining 1.8% to $319.90 after the company signed a direct connection deal with Verizon (VZ), similar to one it had signed with Comcast (CMCSA) earlier this year.

According to a tweet last night by BTIG Research analyst Walter Piecyk, Verizon CEO Lowell McAdams had confirmed the company signed a "direct connection deal with Netflix like Comcast's."

Netflix spokesman Joris Evers also confirmed in a tweet that: "We have reached an interconnect arrangement with VZ that we hope will improve performance for customers over the coming months. Verizon spokesman Bob Varettoni also tweeted confirming the deal, adding that terms were confidential.

The agreement comes two months after Netflix signed its deal with Comcast that ensured that Netflix's domestic streaming subscribers using Comcast will have access to a smooth viewing experience. Prior to the deal, the average speed for Comcast subscribers had fallen, and fallen dramatically. In January, the average speed for Comcast subscribers fell to 1.51 megabytes per second, down from 1.63 in December.

Following the deal, Netflix noted speed on Comcast broadband lines in March jumped six spots to fifth on the list, with an average of 2.5 megabits per second (Mbps). That's up markedly from February, when the average speed on Comcast was 1.68 Mbps, and 1.51 Mbps in January.

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