Policy —

Internet bandwidth report: Have we reached “Peak Netflix?”

The "king" of North American Internet traffic just got even more powerful. The …

Internet bandwidth report: Have we reached

Remember that Sandvine report published five months ago that called Netflix the "king" of North American fixed download Internet data? That survey estimated the online video company's share at 29.7 percent of all peak download time, a 44 percent boost in Netflix's share of traffic since 2010.

Well, Sandvine has issued another estimate. Netflix now accounts for 32.7 percent of all North American peak fixed access downstream content. That's a relative increase of almost ten percent since the spring, and it puts Netflix way beyond the the other three top Internet protocols or services by daily volume—approaching double HTTP (17.48 percent), just shy of three times YouTube (11.32), and nearly four times BitTorrent.

Sandvine

"This fact is of particular importance to network operators, since it means that most video traffic adapts to network congestion by shifting to lower bitrates and quality, which impacts the subscriber quality of experience," the network management company suggests in its latest Global Internet Phenomena Report. "From a network engineering perspective, it means that when capacity is increased, adaptive video simply upshifts to a higher fidelity and fills the new capacity."

Then there's another question: How much more of North America's fixed peak download share can Netflix claim? Has the company peaked?

Absent an explanation

This report comes shortly after Netflix offered a worrisome forecast for the company. On Monday, the video giant predicted that its Euro-launch, which is coming in tandem with a huge loss in North American customers, may take it into the red ink zone for several quarters. The company disclosed that it lost a whopping 800,000 subscribers following its split of DVD rental and streaming services.

"We think that $7.99 for unlimited streaming and $7.99 for unlimited DVD are both very aggressive low prices," the investor letter explained. "What we misjudged was how quickly to move there." The firm also acknowledged that it "compounded the problem" with a lack of explanation about the rising costs of DVD content. "So absent that explanation, many perceived us as greedy."

But Sandvine is less interested in Netflix's quarterly projected outcome than in its share of total Internet traffic in the United States. "Have we seen 'peak Netflix'?" the survey asks. The report approaches this question cautiously. It doesn't expect a huge decline in traffic, because of the widespread availability of Netflix-capable devices, such as video capable game consoles, set top boxes, and interfaces like Apple TV.

Post PC

Indeed, Netflix seems to be benefiting from the rise of the "post-PC era," as Sandvine calls it—a period in which most of what the company calls Real-Time Entertainment streaming on North American fixed access systems ends up on devices other than laptops and desktops. Add tablets and mobile gadgets to the mix, and they claim around 55 percent of all RTE traffic.

Sandvine

"It's hard to envision a scenario in which absolute levels of Netflix will decline," the Sandvine report meditates. "However, Netflix is facing increased local competition, and as a result new services might grow at a faster rate."

Meanwhile Bloomberg reports that Netflix is laying off some of its workers, according to two individuals "with knowledge of the decision." The cuts will come mostly in human resources, "where Netflix had hired in anticipation of faster growth and the creation of separate companies for its mail-order and streaming businesses," the story says.

"Globally, Netflix will grow," the Sandvine report's section on Netflix predicts. After all, the service is available in close to 50 nations. But "in the United States specifically, we might have seen the peak."

Channel Ars Technica