We have discussed Netflix’s many missteps as of late. First they decided to drastically up their prices for streaming services and mail delivery, with some plans going up by almost 60%. As a result of that price hike, Netflix lost hundreds of thousands of subscribers and their stock plummeted rapidly.
In an attempt to rectify that mistake, they then announced they would split streaming and mail delivery in to two separate brands, which caused further outrage because order queues would be independent of one another, and users would have to manage two different queues in two different brands. Less than month after that plan was announced, it was discarded because of intense backlash.
Netflix CEO Reed Hastings has openly admitted that some of the recent changes have been a mistake and apologized to the Netflix client base. However, Hastings has justified his company’s actions, saying that they must move fast to capitalize on the enormous opportunities that the streaming service offers: “The world is moving towards faster Internet connections and mobile devices and Netflix has to be positioned to seize the opportunities these changes represent. That means moving fast, making mistakes and focusing on the digital side of the business, rather than the still-lucrative DVD arm of the company”.
While many of us are probably skeptical of Hasting’s declarations (I for one much prefer to watch a movie on a nice TV as opposed to waiting for a video to buffer or pixilate on my computer or mobile phone), his business savvy was proven in part today with the release of some new statistics. According to Mashable, Netflix accounts for 32.7% of peak U.S. downstream traffic, which is considered to be the hours between 6p and 10p.
Basically, that means that a third of data being sent from a network service provider to a customer was being sent by Netflix in the U.S. during peak traffic hours. While the survey does not elaborate on how much TOTAL traffic the U.S. experiences on average during peak hours, this is no doubt a pretty huge number.
More interesting than Netflix’s share of the downstream market is the way people are accessing it. Fifty-five percent of traffic volume was generated from game consoles, smart TVs and mobile devices. Only 45% is being accessed from laptops or PCs. Considering the fact that many of these devices just recently acquired mobile broadband capabilities compared to computers, this is a pretty shocking statistic. People are using multiple types of devices to access streaming services from virtually anywhere.
I won’t congratulate Netflix just yet; they have a long way to go before I’ll praise their business model after all of the drama this year. However, Hastings wasn’t wrong about targeting at least part of their business towards the Internet and broadband. It remains to be seen whether this streaming-targeted model will prove to be successful.
