Virtually none of Netflix's 45-plus million customers have a 4K Ultra HD television today.
So why is the company bothering to expend cycles to offer "House of Cards" season two, "Breaking Bad" later this summer and other programs in a format that nobody can watch?
Sony and LG, which desperately need 4K content to sell pricey Ultra HD TVs.
The second, less-obvious strategy in play is that Netflix hopes the high bandwidth requirements of Ultra HD will spur Internet service providers to opt in to its content-delivery program -- instead of charging the company access fees.
Reason No. 1: Netflix Can Deliver Ultra HD, But Cable and Satellite Can't
Think of it like this: It's not TV. It's Netflix.
Cable and satellite providers don't have the capacity today to shove Ultra HD video down their pipes, and they're disinclined to move rapidly to adopt the new tech given the relatively tiny addressable market of subscribers who have TVs to even watch it.
Netflix doesn't need to carve out dedicated bandwidth for 4K, because everything on the service is on-demand. "The best-quality video in the world is now streaming via the Internet," Netflix product manager Richard Smith wrote in a blog post. It's worth noting that Comcast also is planning to offer Ultra HD -- but delivered over broadband, not via coaxial spectrum used for traditional TV.
Moreover, Netflix is giving consumer-electronics makers a reason to put it in the pole position on their latest 4K gear. The CE guys need content to drive Ultra HD sales (a chicken-and-egg problem that 3DTV has never solved). Amazon also is pursuing a 4K strategy, with plans to release upcoming originals in the format, with the similar goal of moving 4K TVs off its virtual shelves.
The first TVs capable of streaming Netflix Ultra HD are Samsung models, with support coming on sets from Sony, LG and Vizio 4K TVs, the company says. "If you buy one of these new TVs, just connect it to a power outlet and the Internet, turn it on and sign into Netflix. Ultra HD 4K streaming will work out of the box," Smith wrote.
Super simple, right? Well, not exactly -- which leads to the next point.
Reason No. 2: Netflix Wants to Drive ISPs into its CDN System
To watch its 4K programming lineup, Netflix recommends subscribers have an Internet connection of 25 megabits per second -- five times the 5 Mbps what it suggests for best HD streaming.
Netflix already chews up a ton of downstream bandwidth on ISP networks, accounting for about one-third of total usage. As a result, the streamer has been forced to pay Comcast and Verizon for more bandwidth into their networks. Why is it encouraging subs to clog up broadband even more?
The idea is to put pressure on ISPs to join Netflix's Open Connect CDN program, in which caching servers are co-located at their facilities. Here is Netflix's Smith: "Any broadband provider that's directly connected to Netflix will deliver a better experience, especially during primetime."
Netflix touts Open Connect as reducing upstream bandwidth links ISPs need to deliver high-quality video. More to the point, it saves Netflix money because it reduces the amount of bits it has to pump to an ISP's ingress points. By pushing 4K as the biggest pig in the python, Netflix wants to convince ISPs that it just makes more sense to install the CDN caches.
Will the make-the-ISPs-blink approach with 4K work for Netflix? Today Comcast and Verizon clearly aren't interested in enabling a would-be rival for free, which is why on another front Netflix is agitating for a "strong" net neutrality that would prevent ISPs from charging for access to their networks.
Remember that Netflix originally offered content in "Super HD," its proprietary 4K precursor, only to ISPs who were part of Open Connect. The company last fall changed that policy, after failing to win over any major providers.
In any event, the Netflix 4K strategy shows that the company is thinking hard long-term about the economics of bandwidth and delivering the highest-quality video possible. It's early days for Ultra HD: Just 57,000 4K TVs shipped in the U.S. last year, rising to 450,000 units this year, the Consumer Electronics Assn. estimates. Netflix itself expects it will be five years before Ultra HD becomes mainstream.
If the future points to Ultra HD becoming ubiquitous, Netflix wants to be at the bleeding edge - so it's holding a strong hand that shows ISPs the best way forward is cooperation instead of stonewalling and charging access fees.
SEE ALSO: Ultra HD TV: Not Ready for Primetime
Why Netflix Is Pushing 'Breaking Bad,' 'House of Cards' in 4K Ultra HD
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