Netflix Traffic Now Bigger Than BitTorrent. Has Hollywood Won?: Original Post from Broadband News and Analysis «

The amount of Netflix data passed over ISP networks continues to grow, with its streaming service now making up more North American Internet traffic than even BitTorrent file sharing. While that might seem like a win for Hollywood studios that have spent the last several years fighting piracy, the traffic growth also comes at a time when ISPs are introducing bandwidth caps that could constrain Netflix streaming.

According to Sandvine’s latest Global Internet Phenomena Report, the subscription streaming service now accounts for 29.7 percent of all peak downstream traffic in North America. That’s up 44 percent from the previous figure released in Sandvine’s Fall Study just six months ago.

Even in Canada, where Netflix has only been operating a short time, the service has had a significant impact on data traffic. Despite launching just last September, Netflix now has more than 800,000 subscribers, accounting for about 10 percent of the country’s broadband subscribers. And it now accounts for about 13.5 percent of data traffic there.

But it’s not just during peak traffic hours that Netflix rules broadband networks in North America. 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. And while Netflix taking up a bigger share of broadband downstream data transfer is preferable to P2P traffic, Sandvine is careful to note that BitTorrent traffic isn’t actually going away. P2P filesharing only saw a marginal drop in share, from 19.2 percent in the fall to 18.8 percent six months later. And while P2P has maintained a relatively constant share, the absolute volume of traffic continues to increase.

The news of Netflix’s traffic growth comes as it is faced with a number of ISPs implementing bandwidth caps that could impact how much viewers can stream over their broadband connections. Already, it lowered the quality of streams it delivers in Canada to deal with overly restrictive bandwidth caps in that market.

But Netflix isn’t taking the threat of bandwidth caps lying down: The streaming company met with the FCC last week and shared a letter its CEO Reed Hastings had penned about the impact that broadband caps have on it and other Internet firms. In it, Hastings argued that bandwidth caps represent a huge markup over the incremental cost of delivering streams to end users, and said such moves could stifle innovation on the Internet.

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the epic struggle continues...

Makes Perfect Sense: Netflix CEO Reed Hastings: In Ten Years, “We Will All Have A Gigabit To The Home”

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Excerpt from Erick Schonfeld's original post on techcrunch.com

"Netflix is blowing the doors off its business, with $3 billion in annualized revenue and a $12 billion market cap driven by the transition to streaming online video. In terms of hours watched, streaming surpassed DVDs for Netflix in the fourth quarter, but CEO Reed Hastings has been preparing for this moment for more than decade. The name Netflix itself always held the promise of movies delivered over the Internet. The problem, says Hastings in an interview today at the Wired business conference, was that back then they couldn’t stream movies over 56K modems.

But there was Moore’s Law and improvements in bandwidth which could be plotted, and that is exactly what Hastings did. “We took out our spreadsheets and we figured we’d get 14 megabits/sec to the home by 2012, which turns out is about what we will get.” So what does his spreadsheet tell him about the next ten years? “If you drag it out to 2021, we will all have a gigabit to the home.”...

61% of Internet movies is some serious disruption: Netflix and Apple Lead Disruption of Entertainment Industry - CNBC

"...Netflix, of course, has shifted focus away from movies-by-mail to a streaming model, and it's growing fast. The NPD Group reports that 61 percent of all movies distributed over the Internet are viewed via Netflix. That's nearly eight times the number boasted by Comcast [CMCSA 26.21 0.08 (+0.31%) ], the number two provider and majority owner of NBCUniversal, publisher of this website...."

Read the full article on cnbc.com

Before You Get Excited About Netflix TV, Read This | Brian Steinberg's take on Advertising Age

By: Brian Steinberg Published: March 16, 2011

Excerpt from full article on AdAge:

"...What we mean to say is this: Quality and big names are no guarantee of a show's success, or of the success of a backer of that show, for that matter.

You also have to take into account that Netflix would have to promote the program in an entirely different fashion than any TV network, a process that could work to the company's detriment. Sure, Netflix has more than 20 million subscribers in the U.S. and Canada -- a nice number, but one that falls short of the weekly audience for a single episode of Fox's "American Idol" or even CBS's "NCIS."

Now add this to the stew: Netflix's viewership watches different pieces of programing at different times. The bulk of the TV networks' audience watches the same show at the same time (to be sure, a good number are now watching shows on computer and DVR at different times as well). What we mean to show is Netflix's big challenge of having to promote a new, original series virtually one-on-one -- advertising the program to individual viewers, rather than an audience base tuning in en masse. That's not easy to do -- and seems even more daunting when you consider the fact that even shows that get promoted during a big-ticket sports broadcast sometimes fall flat on their face. After all, for all the promos that run on NBC's high-rated "Sunday Night Football" broadcasts, you'd think the network would have more hits on its air.

There's another wrinkle...."

Whoa!: Netflix To Enter Original Programming With Mega Deal For David Fincher-Kevin Spacey Series ‘House Of Cards’ – Deadline.com

Nellie Andreeva

By NELLIE ANDREEVA | Tuesday March 15, 2011 @ 1:34pm PDT

EXCLUSIVE: Video streaming juggernaut Netflix is becoming an original programming player. In what is probably the biggest gamble in its 14-year history, I hear Netflix has outbid several major cable networks, including HBO and AMC, for  Media Rights Capital's drama series House of Cards, executive produced and directed by David Fincher and exec produced by and starring Kevin Spacey.

Negotiations are still going on, but I hear Netflix landed the drama project by offering a staggering commitment of two seasons, or 26 episodes. Given that the price tag for a high-end drama is in the $4 million-$6 million an episode range and that a launch of a big original series commands tens of millions of dollars for promotion, the deal is believed to be worth more than $100 million and could change the way people consume TV shows.

Ever since Liberty Media chairman John Malone in October drew a comparison between Netfix and HBO, industry experts have speculated whether Netflix would become the next HBO by venturing into originals. HBO, too, established itself as premium cable movie channel before hitting gold with original series that have now become its bread and butter. Netflix, which dominates the movie streaming market at 61%, had said in the past that it was not interested in branching into original programming. Until now.

Given the strong interest in House of Cards from multiple networks, observers had speculated that the project may get an episodic commitment, but a massive two-season order is pretty unheard of these days. Going straight to series itself is a risky proposition as attested by NBC, which recently tried it before reverting to the traditional pilot model. Besides the sandals-and-toga Rome, which was a co-production with the BBC, HBO has piloted pretty much all of its projects, including those with A-list talent such as Martin Scorsese/Terence Winter's Boardwalk Empire and Michael Mann/David Milch's Luck starring Dustin Hoffman. AMC went straight to series on The Walking Dead but with a modest six-episode order. Rome and Fox's CGI extravaganza Terra Nova started off with 13-episode orders. Starz, which has been going straight-to-series with its dramas, ordered 10 episodes of Camelot and 8 of Boss. Snatching a high-profile project like House of Cards is certain to put Netflix on the map. But by committing to air/stream and market a 26-episode original series, something it has never done before, it will also put the company to the test....

Read full post on deadline.com

 

Warner Bros move not a threat to Netflix- Sector Snap: Video rental and streaming companies - #infdist

Warner Bros.' move to test an "app" that lets Facebook users pay to watch movies does not represent an immediate threat to Netflix Inc. and other video-on-demand companies, according to an analyst.

Merriman Capital analyst Eric Wold wrote in a note to investors Wednesday that Warner Bros.' test should not shake Netflix investors' confidence for a few reasons. For one, there are many other places on the Web to get movies "in much better quality and convenience than what we experienced through the application on Facebook," Wold wrote. He suggested Apple Inc.'s iTunes, Amazon.com Inc. and even a service from Wal-Mart Stores Inc.

read the full post on businessweek.com

Netflix: Can Its Business Model Survive? -Karl Denninger on Seeking Alpha

In a rather interesting move, Warner Brothers apparently is making available "Dark Knight" through Facebook on a pay-per-view basis.

Barriers to entry? Moat? What's that? There isn't one for online video streaming, which is a huge problem. Well, for Netflix (NFLX) it is anyway.

I have long pointed out that Netflix has a major issue with their basic business model, which I argue is basically one of poaching transport charges and billing out only at some reasonable multiple of the licensing charges for the exhibition. That's a nice model, if you can manage to (1) defend it against other entrants, and (2) not get hammered for the distribution costs you managed to shift onto others.

Unfortunately #2 isn't likely to work for long, and now #1 is under attack from all sides. Coinstar (CSTR) (Redbox's parent) and Amazon (AMZN) have announced intent to enter the market, and Amazon has actually done so, making available some of their already-licensed "instant view" content to those with PRIME memberships - without an additional fee.

Facebook has one advantage - 600 million accounts worldwide. Whether there's an actual business model here with a PPV sort of setup is another question entirely, especially considering that Facebook isn't exactly a revenue monster - in fact, I'd argue that there's no revenue of note at all. Oh sure, they've got some advertising money and will for a short while, until advertisers figure out that (1) people don't come to the site for ads, and (2) if you get annoying people will either block display of those units or turn you off. You can only sell advertising in that environment until the buyers figure out that they're wasting their money, at which point your "revenue model" collapses.

read Karl Denninger's full article on seekingalpha.com

Another Big Shift: New Film Site Fandor: A Cross Between Sundance and Netflix, Only Smaller #infdist

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Tim Appelo's full article is on Hollywood Reporter

"What the film industry desperately needs is a merger of social networks and content," says Ted Hope, the celebrated producer of American Splendor and dozens of indie hits at Sundance and elsewhere. That's why he just joined former Facebook chief privacy officer Chris Kelly on the board of Fandor, the indie film streaming site built by Dan Aronson and Jonathan Marlow, a veteran of Amazon and GreenCine. After several months in beta (trial-run mode), Fandor made its full-fledged debut Wednesday.
Fandor streams about 2,500 films, far fewer than Amazon or Netflix. But instead of having users discover movies through mainstream studio marketing and "people who bought this also bought that" algorithms, Fandor concentrates on indie (and international) movies -- no TV -- and relies on human expertise to curate, like a film fest programmer or the proprietor of a great video store like Chicago's Facets or Seattle's Scarecrow Video -- to pick the good ones, from The Cabinet of Dr. Caligari to the latest, weirdest Oscar-nominated foreign film, Dogtooth. "It isn't just a simple algorithm," says Marlow. "It's an actual individual who can distil the reasons why you might be interested in the movie." Then you can read learned essays about the films, and plunge into the discussion youself. For $10 a month (or a free first-month introductory trial) you can watch all you want on Fandor, and rave (or pan) them with friends on Facebook..."

Netflix Stock Drops After Facebook Movie Streaming Announcement - The Hollywood Reporter

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Excerpt from full article on Hollywood Reporter:

"The movie rental giant's shares dipped 6% on Tuesday as another new competitor joined Amazon.com in the movie-streaming business.

One day after Warner Bros. said it will let Facebook users stream The Dark Knight for $3 over their computers, Netflix stock dropped 6% Tuesday on worries of another rich competitor entering the fray...."