Netflix CEO says content brought revenue in response to telecoms – 02/28/2023 – Tech

Greg Peters, CEO of Netflix, said on Tuesday (28) that the company’s contribution to the ecosystem is in content, which leads subscribers to telecommunications companies.

The message comes amid the arm wrestling created between the technology sectors and operators, who want a “fair sharing” of investments in network infrastructure. The telcos claim that more than half of Internet traffic comes from the five largest tech companies, including Netflix.

The answer came on the same stage as the MWC (Mobile World Congress), the main event in the telecom sector in the world, where this Monday (27th) representatives of the operators defended the division of costs. The congress takes place this week in Barcelona.

According to Peters, Netflix’s work is only possible thanks to an ecosystem of partnerships with different sectors: content creators, technology platforms and telecommunication companies.

The executive argues that the increase in traffic in recent years has not caused an increase in costs for internet companies, thanks to an improvement in the efficiency of the systems. He says that, on the contrary, it brought customers.

“Of course, this great content requires investment. On our part, it was more than US$ 60 billion (R$ 314 billion) in the last five years. It is more than half of our revenue in that time. We did our part”, he said. “We are business partners with more than 160 companies in the industry, many of which offer Netflix as part of their subscription. Customers love these offerings and it shows the value we can have through collaboration.”

Peters cited Netflix’s investments in content distribution networks, which save videos that stream in scattered locations so they are closer to consumers. This reduces traffic demand (information doesn’t have to travel far) and improves quality for the consumer. “We spent more than US$ 1 billion (R$ 5.2 billion).”

He also criticized the idea of ​​creating a tax on production companies. The amount raised would go towards telephony infrastructure. According to Peters, even if it was aimed at companies like Netflix, it could impact other companies in the sector.

“Furthermore, we can argue that our profit margins are much lower than those of operators like BT and Deutsche Telekom, so they should be paying us for our content that brings in customers,” he said. “But we won’t.”

DISCUSSION

At the opening of the MWC, representatives of the telephony sector mentioned the technological transformations expected for the coming years, such as the metaverse and the growth of artificial intelligence, and the expectation of an exponential growth in the demand for data traffic.

“Cloud computing has changed the bar, but it will not be enough with all the traffic that Web 3.0 must generate”, said José Maria Álvarez-Pallete, CEO of Telefonica and advisor to the GSMA, an entity that brings together the telecoms and organizes the MWC. “It’s time for collaboration between technology companies, big techs and industry,” he added.

The dispute comes amid discussions in the European Union for large technology companies to help pay for telephony infrastructure costs, the so-called “fair sharing”.

On Thursday (23), the European Commission, the bloc’s executive arm, opened a public consultation on the topic of “fair sharing”, open until May 19.

For Thierry Breton, in charge of the European Union’s internal market, the challenge for future connectivity is that the current telephone network does not support the technologies that will come. “We still see delays that don’t allow connected cars, or generate a 3D tour,” he said on the main stage at MWC.

He cited the pandemic, saying the internet was on the brink of collapse. “At the time, I called the CEOs of the main streaming platforms and asked them to reduce the quality of the transmissions. I was answered and the effect [de alívio] It was immediate.”

Breton cited the public consultation as “part of the puzzle” for these future investment models.

Journalist traveled at the invitation of Huawei