Netflix Gobbles Up One-Third of Peak Bandwidth Traffic in US

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Angry customers may be leaving Netflix, but those who stick around are using the service to stream movies more than ever.

This fall, Netflix accounted for 32.7 percent of peak downstream traffic in the United States, compared to 29.7 percent last spring, according to a report from Sandvine. On a daily basis, Netflix averaged 23.3 percent of aggregate traffic, compared to 22.2 percent in the spring.

Still, Sandvine wonders whether Netflix has reached its peak in traffic share. The online video company unbundled its DVD rental and streaming services in July, resulting in a 60 percent price increase for many users. The price changes hit existing customers in September, which Sandvine says is the "month of reckoning" for Netflix.

Although Netflix probably won't see a drop in absolute traffic, competing services such as Amazon Prime Instant Videos may grow at a faster rate and get a bigger slice of the U.S. bandwidth pie. "Globally, Netflix will grow ... but in the United States specifically, we might have seen the peak," Sandvine's report says.

Either way, the rise of streaming video services like Netflix should be bittersweet for movie studios and TV networks. On one hand, the gap between Netflix and BitTorrent use is growing (BitTorrent's share of aggregate U.S. traffic dropped from 21.6 percent in the spring to 16.5 percent in the fall, according to Sandvine), suggesting that people are turning to paid content instead of piracy for online video. On the other hand, Netflix and Amazon pose a threat to other business models, including cable, DVD sales and video on demand.

Increased demand for streaming services has also caused some Internet service providers to crack down. In the spring, AT&T started limiting its DSL customers to 150 GB per month, and its U-Verse customers to 250 GB per month -- a move that my colleague Jeff Bertolucci referred to as a "Netflix Tax." Comcast also caps data use at 250 GB per month. So far, no other major Internet service providers have followed suit, but they may become tempted as Netflix and other streaming services grow in popularity and demand more bandwidth.

For more fun stats on how people are using the Internet for Netflix and other online video sites, see the infographic above.

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This story, "Netflix Gobbles Up One-Third of Peak Bandwidth Traffic in US" was originally published by PCWorld.

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