Netflix has quickly emerged as the dominant player in video streaming content, being well-positioned to take advantage of a shift away from traditional TV and toward over-the-top content. But do other players stand a chance against Netflix?
It’s early, but with the popularity of streaming video, it seems as if there’s room for more than one major player.
Streaming platform use is spreading
Nielsen data indicates that 40% of homes in the U.S. have access to one or more streaming platforms. According to Barclays analysts, homes in the “most desirable demographics” and income levels are more likely to watch streaming content. (All graphs/ charts in this article are courtesy Barclays.)
In fact, many homes are actually watching streaming videos on their TV rather than just mobile devices. This benefits Netflix but also Google Play and other services that are accessible through set-top boxes by making these services feel more like traditional TV without the commercials.
It’s also getting much easier to access more content because the amount of streaming content that’s available has exploded in recent years. This explains why there’s such a significant shift away from traditional TV viewing in the biggest U.S. markets.
Barclays analysts note that these trends also mean that it’s becoming easier for U.S. consumers to “cut the cord” by dumping their traditional pay-TV providers.
Netflix is changing our behavior
The analysts also found that the behavior of homes with access to streaming video on demand is quite different from the rest of the households in the U.S. Netflix homes watch a lot less live TV than non-Netflix homes. In addition to consuming content on Netflix, they also watch more videos on gaming consoles like the Xbox and PlayStation.
In spite of these differences, however, there’s still plenty of room for growth in streaming video.
Netflix, YouTube popularity on the rise
Recent data from Sandvine indicated that Netflix and YouTube together accounted for more than half of desktop internet traffic. Earlier this week, Barclays analysts suggested that the data indicates BitTorrent is losing out on that traffic to Netflix on YouTube, adding that piracy may also be on the decline as Netflix’s popularity rises.
One thing to note with Sandvine’s report is that the firm measures the percentage of internet traffic during peak hours rather than pure volume or usage. BitTorrent claims that its traffic actually not declining because its traffic is “congestion aware,” which means that the website’s protocol reduces the strain on the network by yielding to other applications during peak usage times.
By design, BitTorrent uses the least amount of bandwidth possible during peak usage periods, which is why Sandvine’s data suggests that the website is losing out on traffic while Netflix is gaining share.
Streaming video is growing, but is it growing too fast?
By comparison, BitTorrent suggested that the rise in Netflix’s traffic as shown by Sandvine may be putting a strain on internet structure because of how the traffic “behaves,” with each stream being “exponentially bigger than it was before.”
“Imagine a bridge used to having bicyclists traveling over it suddenly having to deal with fully loaded tractor trailers,” a BitTorrent spokesperson told ValueWalk. “It’s that jump in weight that’s the issue.”
There is also a big misconception about BitTorrent in that so many people believe it’s used primarily for stealing video content. The company said Facebook, Twitter, Wikipedia, Blizzard, Amazon and many other major internet platforms actually use its services “to do the heavy lifting.”
As of this writing, shares of Netflix were up 1.17% to $632.77 per share.
