Netflix Accounts for 20% of Downstream Peak Traffic
Netflix video streaming traffic accounts for more than 20% of the downstream traffic in the United States and is heaviest between the peak hours of 8:00-10:00 p.m., according to a new report from bandwidth management equipment vendor Sandvine. Within North America, Sandvine observed that real-time (i.e. streaming) entertainment is the largest contributor to data consumption on both fixed (43% of peak period traffic) and mobile access (41%) networks.
The statistics, taken from Sandvine’s “Fall 2010 Global Internet Phenomena” study, have long-term implications for how cable, telco and satellite providers manage their networks, and in the short-term may force broadband service providers to find new ways to motivate consumers to shift some of their usage to off-peak hours.
“The quality of the network will always be judged on the quality of the most latency-sensitive applications,” said Sandvine President and CEO Dave Caputo. “You may have to address the peak-time surges by getting people to shift their usage on non-sensitive apps to prime time. Now, apps like online back-up and bulk downloads are happening in prime time, and service providers may need to convince customers they will get better quality if they do those things during non-peak hours.”
Sandvine’s eighth annual bandwidth study was based on data collected from more than 200 cable, DSL and mobile service providers worldwide during August and September 2010.
Netflix, which had approximately 16.9 million subscribers at of the end of September 2010, provides its “Watch Now” Internet streaming service on more than 100 devices, including TiVo DVRs, Roku, Apple TV, Google TV, Microsoft Xbox 360, Sony PlayStation3, Nintendo Wii, and many Internet-connected TVs and Blu-ray Disc players.
In related news, Netflix has been testing a $7.99-per-month streaming-only service in Canada and just this past week announced that it has started testing the plan in the United States as well. In prepared remarks for a conference call discussing the company’s strong third-quarter earnings, Chief Executive Reed Hastings said Netflix was looking to offer a new lower-cost plan through which subscribers could access movies and TV shows solely online. Hastings said he would like to have the strategy launched in the United States by the end of the year.
Netflix’s subscriber growth has been accelerating recently as consumers cut back on alternative video purchases and turn to lower-priced rentals. The number of new subscribers grew 279% in the third quarter from a year earlier. The company said 66% of subscribers watched at least 15 minutes of content from Netflix online in the quarter ended September 30, up from 61% in the second quarter.
“By every measure we are now primarily a streaming company that also offers DVD-by-mail,” Hastings said. “DVD-by-mail shipments are still growing, but streaming for us is much larger and growing much faster.”