Netflix Accounts for Almost 30% of Peak Internet Traffic

A recent Sandvine study reports that Netflix now accounts for almost 30% of peak Internet Traffic, and Ryan Lawler at NewTeeVee makes an interesting observation about Netflix vs. piracy:

According to Sandvine, even when averaged over the entire day, Netflix accounted for 22.2 percent of North American data traffic. That’s more than even more than BitTorrent, which accounted for 21.6 percent of traffic, and had long been the single largest component of data traffic on broadband networks. One could argue that’s good news for Hollywood studios, which have spent the last several years trying to combat the spread of their movies on peer-to-peer networks like BitTorrent. 

I've always believed that if you make content easy to access and price it reasonably the majority of people will pay for music, movies, ebooks, etc. There will always be pirates, but Netflix is proving that most people will pay for content if it's a fair deal.

via TechCrunch.

Comments

[Tester]

I doubt the studio's will see it as less pirating of their product. Greedy bastards that they are they'll, as they always do, see it as money they not Netflix should get.

[Tony Bullard]

I can attest to the "easy to access and price it reasonably" crowd. When Hulu Plus came to my Xbox, I bought in. Fair price, fair service. It's got some drawbacks. but it's good enough that I can't make the excuse to pirate those shows anymore.

[Proudtobeageek]

I downloaded my share of movies/TV in college when I was broke and there wasn't much of a better option. Now that I have a regular job and no more tuition to worry about, ten bucks a month for unlimited streaming and/or rental of just about anything I want to watch is more than reasonable and I'm happy to join the legit service crowd.

[Jason Becker]

Umm why does it say almost 30% when in the actaul post its 22...math issues?

[BP]

@ Jason

Peak internet traffic is a specific time of day, whereas the 22% figure is when Netflix's traffic is averaged over the entire day.

-BP

[Knaldskalle]

@Jason: The 22% value is "averaged over the entire day".

[BP108]

The data gathered for these reports is completely subscriber-anonymous.
Sandvine is a joke they have 220 people sign up annoymously and fill out their questioneer. Not exactly bankable stats.

Netflix: Setting Up for Disaster
http://seekingalpha.com/article/270618-netflix-setting-up-for-disaster

[Knaldskalle]

Way to go off-topic there, BP108.

[BP]

@ BP108

That is factually incorrect. It is not "220 people sign up anonymously" it is data collated from organizations which includes over 220 international ISPs.

Do you ever get tired of being wrong?

-BP

[Rocketboy_X]

@Knaldskalle You're assuming that BP108 is ever on topic?

[Edward R Murrow]

How much does Netflix pay for consuming 22.2% of North American data traffic?

[gir]

Put another way, NetFlix satisfies 30% of peak customer demand.

I always feel that these stories imply that NetFlix is somehow taking advantage, and I think that's misleading. NetFlix pays a CDN to deliver data to ISPs, and customers pay their ISP to get the data to their residence. No one is taking advantage of anything.

[BP]

@ Pud

I pay generic ISP n dollars monthly for a service with y throughput and, more and more often these days, z amount of bandwidth.

Netflix pays generic CDN o dollars for a service that both provides storage and has peering agreements with generic ISPs as well as generic middlemen transit networks that results in part of Netflix's contract with generic CDN worth o dollars going to pay for the entire route their data takes from generic CDN to generic ISP.

Depending on the peering agreement, generic ISP profits not only off of my n dollars monthly, but also off of Netflix and co's o dollars monthly.

Therefore, combining data I have previously extrapolated in posts you completely ignored with data newly created in this one, it is possible to further extrapolate the profit margin within which generic ISPs are operating. Not only that, but using the data presented in the above article, in combination with data from generic ISP and generic CDN and generic transit network, it would be possible to determine how many ISPs, CDNs and middlemen networks wouldn't exist if it wasn't for the massive amount of data Netflix pushes down their pipes.

Without a service with which the end user desires to create a connection, there would be no connection. If Napster heralded the era of 56k (and the beginnings of DSL) and Bittorrent heralded the era of even faster DSL (and DOCSIS 2.0 cable) then it stands to reason that Youtube, Netflix and other bandwidth-intensive streaming data sites heralded the era of fiber and DOCSIS 3.0.

Per usual, it is the content creators, in a shaky agreement with content distributors, as well as pornography and piracy, that have led to a massive increase in downstream speeds and the technology behind them. At every turn ISPs have sought to sell consumers this technology, make them and all of the above pay for it while simultaneously claiming that those are the exact reasons you should have it, because if you can download movies faster you can watch more movies, and oh by the way you've now watched too many so we'll be capping how many you can watch, but you can watch more for an additional fee... and, well, there you have it, but will you care?

To wit, I pay my fair share, and so does Netflix. The only people not paying their fair share are the ISPs, who charge you, very rarely fairly, for having their technology installed, for using it, for using it too much, and then sometimes even for having it removed. I pay for the rollout of the technology, I pay for the use of the technology and then, depending on the peering agreement, the ISP either makes money or breaks even on the backend. Now how is that for some crap? Is it worth mentioning the number of tax breaks and tax loopholes companies exploit to make all ready profitable new tech rollouts even more profitable?

Not that you'll care, as you never do. You're here to do the exact same sort of crap jolly/BP108 does. This time you won't have anything to hide behind, though, as there are no swear words or personal attacks in this entire post.

Your move.

-BP

[Tester]

@ BP108, do you understand what "staying on topic" means? I doubt it, and so do a lot of others here.

[Go2kcmo]

Netflix now accounts for about 30% of peak downstream Internet traffic. It's just passed up bit torrent technology - 20-25% (piracy - yo ho ho). Sadly, porn is also a large percentage. So studios need to utilize Netflix with a better selection, even if subscription fees go up (a little). Piracy becomes obsolete. Maybe even porn will go away (ha!). My daily plug for InstantWatch. You're welcome.

[BP108]

HBO recently released its HBO Go app for mobile devices and reportedly had 1 million downloads in the first week of its launch. [1] The app works both for Apple’s devices as well as Android-based gadgets.

I wonder how many of these are or should I say were netflix subscribers?????????

[BP108]

Look BP I can copy and paste to.....

The rundown of how your kids access the entertainment that moves them is vital to an understanding of what an investment in Netflix represents going forward. It's a bet on a business model that has seen its better days, a way of doing things that will soon be wholly irrelevant. Programmers and consumers can both live without Netflix. And once they've both drained Netflix completely dry -- of cash and of reruns, respectively -- investors will have no choice but to dump NFLX. The bottom will fall out.

Netflix receives nothing other than content that people have seen a million times over and can see, for free, via other sources pretty much whenever they want. Netflix receives nothing exclusive, nothing fresh and new, and nothing of value. Why? Because it provides programmers with nothing of value in return, except for cold hard cash. And this assumes Netflix can live up to the deals no CPA in his right mind should have let NFLX chief Reed Hastings sign in the first place.

These Nickelodeon sites, and most others that do deals with Netlfix, never direct visitors to their properties' websites to Netflix. They have absolutely no incentive to do so. Netflix represents nothing but a paycheck -- an earnings pump and dump -- to programmers like Viacom (VIA).

I have yet to see anybody bring up the fact that programmers rarely, if ever, cross-promote to Netflix. They do, however, link to Apple, certainly because there's something in it for them. But that's not the only reason. An association with Apple does well for their images. It adds value to be associated with a premium brand, as opposed to one that gives away your blood, sweat, and tears for eight bucks a month.

When I see Disney (DIS) go out on its own and stream its ESPN properties or I look at a service like HBO Go, I realize that it's just a matter of time before Netflix and third-party streaming becomes a thing of the past. Seeing how my daugther -- a future streamer of America -- uses these sites, it would make perfect sense to charge her a few bucks a month for access to "exclusive" content as well as an archive of already-been-seen Nickelodeon progamming.

I fully realize that kids' shows will not make or break Netflix. A peek at how people -- especially young people -- interact with online content, however, adds another small piece of support to the notion that Netflix does not represent the future. In many ways, Netflix, as cutting edge as it may appear on the surface, is akin to AM radio. It makes available all of the content that people can get from other sources. And it has none of the content that people are talking about today. It's worse than rerun-TV; it's the place reruns go to die.

[Complication]

Something else to consider is that total consumed is not exactly relevant for a vast structure like the Internet. It is an indicator of what people are using their connection for but not an indication of how much capacity is in use.

Neflix streaming is now big enough that they should be (and maybe already are) in talks with the larger ISPs to move the content into the ISP's network. Much like ISPs often cache commonly accessed image files, NF might create an easily distributable server instance that an ISP could deploy to reduce back-haul bandwidth.

[BP]

@ BP108

"Look BP I can copy and paste to....."

That's all you do, shitberg.

[Robert Emmerich]

"One could argue that’s good news for Hollywood studios"

One could argue that but it would have nothing to do with the data here. NF uses more bandwidth than BitTorrent. SO?!?! All this means is the total traffic has probably gone up, BitTorrent could be tripling every year but NF is quadrupling. Without the BEFORE and AFTER amounts for BT the NF number is irrelevant. {In the NewTeeVee link he actually SAYS THIS. Moron. "And while P2P has maintained a relatively constant share, the absolute volume of traffic continues to increase."}

Also, if NF added porn it could possibly reach 98% of all internet traffic. jk

[BP108]

BP or whoever you are???? shitberg???obviously you don't read what people think about you around here!!

I can't find one person who does anything but tell you your full of shit, go away or that's not sick of listening to you.

I got to say I might read one of your post once in awhile but only if it's no longer then 3 lines after that you lose my interest.

[Edward R Murrow]

I asked a question in good faith - how much does Netflix pay CDN's such as Akamai Technologies, Amazon CloudFront, Level 3 Communications, etc? If I wasn't so lazy, I suppose I could drill down into their financials on Edgar. I just thought one of the Netflix employees would rattle this metric off.

By the way, I'm not pud although Philip Kaplan is pretty cool.

[BP]

@ Hypocrite who complains about people's swearing even though he's a fan of the guy who ran fuckedcompany.com

You didn't ask a question in good faith. You're well known as being anti-Netflix, and it was a fairly jerk-ass remark. Moreover, you didn't respond to a single point I brought up. You don't care to have a real conversation about this, and never have.

What you really meant by your question was "Does Netflix pay for 22.2% of North America's bandwidth costs OR IS IT A GIANT LEECH?" You can try and deny it, but you know, and I know, and everyone else here knows that it is exactly what you meant.

As I illustrated in my post, I pay for the bandwidth costs associated with bringing Netflix's data through my pipe to my network, while Netflix pays for the bandwidth and storage costs associated with transmitting their data from their servers to my ISP's network. Most likely, the ISP profits off of both Netflix and I, as that is how most peering agreements work.

But you don't care. You're a hypocritical troll whose only function is to serve as a fractionally more literate version of BP108, seeking to lend whatever slight amount of credence to whatever anti-Netflix bias you both share.

The thing is, and I'm going to dumbfuck this down for you so you can fucking understand it: Companies exist to make a profit. Netflix makes a profit off of us. Akamai makes a profit off of Netflix. Amazon makes a profit off of Netflix. Level 3 makes a profit off of Netflix. The studios make a profit off of Netflix. AT&T makes a profit off of Netflix. AT&T makes a profit off of its customers. That is the way the world works. These entities would not exist if they were not making profit. CDNs and intermediaries would not exist if they did not make a profit. Telcos would not exist if they did not make a profit. Every company involved, from the content creators to the retail (end user) bandwidth providers, makes a profit off of Netflix. If they didn't, they simply wouldn't exist, as there is no room in this industry for an entity which cannot monetize something as simple as cheaply delivering another person's content.

Your argument is invalid and you are a fucking jackass for continuing to act like an obtuse wank who doesn't get it despite continually having it put to you like you are a fucking infant. Every single post you have made here is anti-Netflix. Nearly every single post you have made is a one-off. You rarely return to a thread to debate the discussion your comments have sparked. When you do return to a thread, you never participate in the discussion, instead spouting off some contrived platitudes about how all you wanted was a simple answer from someone at Netflix - which is suspiciously similar to BP108's constant siren song - and how you never get it.

Well guess what, you don't get it because your comments are biased, your questions are loaded and your purpose false.

Fuck off.

-BP

@ BP108

s/your full of shit/you're full of shit/

Hope that helps.

[Tester]

Hey BP108, I have to side with BP on this one. Even though I don't always like the way BP handles himself some of his posts are insightful, including the one right above this one.

Your ramblings on the other hand have more BS in them than I have ever seen. DO US ALL A FAVOR AND DROP DEAD!

[Knaldskalle]

Like Tester I'm cheering for BP, at least in his fight against BP108.

[gir]

I too am rooting for BP. I have been for a while, and while others are bothered by profanity I find his "screw you, this is how I talk" attitude refreshingly honest.

[Royrapoport]

@Edward R. Murrow,

How much Netflix pays its CDNs is one of those things a lot of people would like to know, and it's also one of those things I don't think Netflix has ever actually stated. This means that I'd guess you're not likely to see Netflix employees answering that particular question here.

[Tester]

@ Gir:

I personally don't have a problem with anyone using profanity. I've used it myself many times. My problem is with personal attacks. If you don't agree with someone's viewpoint you shouldn't have to take the verbal abuse of things like "you're an ass", "you're dense", or whatever else they say about you.

The only time I don't have a problem with attacking someone personally is when someone retaliates, with personal attacks, against the person who initiated making it personal.

[gir]

Agreed, though I have no qualms when someone attacks a spammer (and let's be honest, that's what jolly is - the fact that he's trying to cram an unsolicited opinion down our throats rather than an unsolicited product doesn't diminish that).

[Chicusmc05]

@BP108 you are so retarded that I even took the time to actually do a post on this site. HBO GO isn't anyway related to Netflix, with HBO GO you still have HBO monthly subscription through a television PROVIDER. So in since the app just a added feature of the 19.99 a month cable companies charge for ONE channel

[Chicusmc05]

@ BP the HBO GO app is just an ADD ON FOR GETTING THE CHANNEL THROUGH A TELEVISION PROVIDER. so i doubt they are going to put netflix out of business..haha!!

[BP]

@ Roy

Well, Netflix has said time and again that their cost to deliver data is less than a penny a gigabyte. Whether this takes into consideration storage fees or not I can't say, but what I can say is that it is extremely easy to quote out a price for per gigabyte storage and delivery with services such as Amazon. I guarantee that whoever is Netflix's CDN offers far, far, far, far cheaper pricing than Amazon, especially at the sort of level Netflix is using, but let's do the math based on a high/low scenario:

According to a survey (I believe, or was it Netflix?), the average Netflix user watches 27 hours of content a month.

Let's, for argument's sake, say it's HD content. That's 2.5gb/hr * 27 = 67.5gb a month per user. Let's spread that across all 20 million users, so that's 20m * 67.5 = 1,350,000,000 gigabytes (or 1.35 million terabytes, or 1350 petabytes, or 1.35 exabytes) that Netflix transfers in a month. I think this is probably high-balling it, but let's go with it.

So, using the high ball cost of a half a penny a gigabyte transferred, Netflix would be spending about $72,000,000/yr on bandwidth costs. That's 1.35 billion gigabytes * $00.005 * 12. The low ball cost of a tenth of a penny a gigabyte would cost Netflix just over $16,000,000. To transfer all of the bandwidth the use for streaming content delivery. In a whole year.

Now, storing data is a lot cheaper than transmitting it, but just to make a point, let's simply assume it costs the same. So that would be another $72,000,000 or $16,000,000 a year for storage.

That means that at the highest end of the highest high ball Netflix would be spending just about $144,000,000 a year for their entire streaming library. On the flip side, they'd be spending just a tad over $32,000,000.

According to Netflix's own SEC filings, they spend $203,000,000 a year on "Fulfillment Expenses" - a category which includes streaming costs as well as the cost of operating their brick and mortar DVD shipping business. Now, I'd wager a bulk of that $203m is spent on the DVD end of the business, as there you have a massive amount of overhead - labor costs, property, upkeep, so on and so forth. So that automatically requires you to throw out the larger $144m number as the cost of their streaming business - or does it?

Further down in the filing you find that they spend $163,000,000 a year on Technology and Development, a category which includes, and I quote, "certain costs paid for third-party Internet-based or “cloud” computing services used in connection with our business." I'm no fan of the way Netflix files their annual reports, but it isn't as if it takes a rocket scientist to figure them out.

So how much does the streaming end of things really cost? In the end, somewhere in the middle of the two numbers, which would peg it square at $88,000,000. I'm going to say that's how much it costs Netflix yearly to host their content and deliver it from their network to my home. That includes the highest of all the numbers: average number of hours a month watched, times total number of subscribers, in the highest resolution possible (which means more bandwidth and larger files), without taking into consideration the real costs of storage, too. And if that's all they spend? Man, that's just fucking marvelous.

And it fits in perfectly with Netflix's stated cost of less than a penny per gigabyte to deliver those movies from their servers to my home. The cost might be a bit higher, or it might be a bit lower, who knows, but them's the maths as best as I can work them, and it wasn't too hard to figure out, either.

-BP

[BP108]

@Roy

If you took the time to read the post above this one then you realize that BP has way to much vested interest in Netflix.

Who cares how much it cost it's irrelevent because the money they are spending on content trumps all of it. What are we up to 1.9 billion now?

In the end it's the users who are going to be charged not Netflix for that last mile to get the content delivered to them.

The other big problem for Netflix now is Dish just announced that new subs will also get 3 free months of Blockbuster by mail officially throwing their hat in the ring for direct competition with Netflix.

No matter what the numbers are BP is floating out there for you it's irrelevent because Netflix filings, omissions and pyramid scheme approach to accounting don't add up.

[Tester]

@ Gir:

You'll get no argument from me. Jolly, no matter what he calls himself, is most assuredly a spammer.

[BP108]

Spammer sure seems like I'm talking about Netflix on a Netflix board. What are you?

[BP]

That's it. I've had it. I'm done with this.

Ban BP108 or I'm gone, Mike. He is a troll or a spammer with no desire to legitimately discuss any of the topics presented to us or that come up naturally in the flow of conversation. Moreover, he constantly changes the goal posts to suit his own arguments, thereby rendering any attempt at actually refuting his "points" worthless.

I suspect I'm not the only one tired of dealing with this, Mike. You've spent the last month enacting rule after useless rule. Not useless because they aren't good rules, useless because you refuse to enforce them. I've said it once, I'll say it again, if your enforcing the rules means my swearing/attitude causes me to get banned, then so be it.

BUT FUCKING TAKE CARE OF YOUR OWN FORUM LIKE YOU GIVE A SHIT ABOUT IT.

-BP

[BP108]

You promise your gone. Bye!!!! Your 50% of the problem with this forum.

Why do I have a feeling you are going no where.

[BP108]

What's even funnier BP is you do nothing but attack/ swear and are nothing more then an abusive douche who obviously works at Netflix. What makes you think anybody will do anything but rejoice at your leaving. GO.

Poor baby has someone give back to him and he whines and threatens to take his toys and go home. GO.

[Tester]

HEY BP108, YOU'RE 100% OF THE DAMNED PROBLEM HERE. SHUT UP!

[Tester]

Mike, I'm letting you know now. I've had it! My next post to BP108 will probably be the most vile post you've ever had here. I'm as serious as a heart heart attack about that.

The times we've spoken you seem like a really decent person so I'm not sure why you continue to allow this BS to continue.

I do have one thought about why you allow it to keep on going but I'm going to keep it to myself for now.

Either get rid of Jolly and the rest of his FUCKING names or block me from posting.