Level 3 signs 3-year deal with Netflix

Local communications company, Level 3, announced Thursday it signed a three-year deal to store Netflix's content library and become its primary streaming service provider.

Level 3 would not disclose the financial details of the deal, but said it was inked last month.

"Level 3's track record for delivery and network scalability were critical factors in our decision to work with Level 3 on a long-term basis," Andrew Rendich, chief service and DVD operations officer with Netflix stated in a news release announcing the deal. "We've been impressed with their speed and consistency, and we feel confident in their ability to quickly scale to meet demand as more and more Netflix members watch instantly."

As a result of the deal, Level 3 says it will invest $14 million into its content delivery network. The investment will double Level 3's storage capacity and 2.9 Terabits per second (Tbps) to its global streaming capacity. That's in addition to the 1.65 Tbps the company says it added in the third quarter in 2010.

"Netflix has been a great customer to have, and we're very pleased to have won a larger share of their growing business," Mark Taylor, vice president of content and media for Level 3, stated in an e-mail to 9NEWS.

Taylor says Netflix's evolving business model is in line with Level 3's original vision.

"Efficiencies, speed and cost-effectiveness of online distribution of content, in this case video, will win out over other distribution mechanisms over time," Taylor stated.

The added storage capacity will come in handy since Netflix boasts more than 20,000 titles. The content library will be moved over the next two months, and Level 3 says it will begin serving traffic on Jan. 1, 2011.

Level 3 says the investment in their network has put them in a position to take on additional customers.

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