Netflix, Inc. (NFLX) Is King of North American Streaming

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Netflix, Inc. (NFLX) Is King of North American Streaming

Netflix, Inc. (NASDAQ:NFLX)’s popularity is rising primarily due to its strategy of offering more and more original content, and here is one more fact supporting that. According to a report from Sandvine, a maker of broadband network equipment, the streaming company now accounts for 34.2% of the all the internet traffic in North American homes during peak evening hours.

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Such a high percentage of internet traffic suggests that on any given night over one-third of the total traffic in North American homes consists of Breaking Bad, House of Cards or other content from Netflix, Inc. (NASDAQ:NFLX).

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Last year, Sandvine’s Global Internet Phenomena Report, which is released twice each year, reported that Netflix accounted for 31.6% of the internet traffic in November.

In the first quarter, Netflix, Inc. (NASDAQ:NFLX) gained over 2 million subscribers in the U.S., bringing the total subscriber count to 35.67 million. One of the primary contributors to Netflix’s rising clout in data usage is the superior quality of the stream, according to Sandvine. Last year, in September, the streaming entertainment firm made some of its titles available in Super HD, which is around 50% larger than the traditional 1080p file size.

“By offering that content, Netflix streams of the highest quality increased in size dramatically. And that’s really one of the main reasons for the spike,” said Dan Deeth, the media relations manager for Sandvine, in an interview with The Huffington Post.

In terms of data used, Netflix, Inc. (NASDAQ:NFLX) is far ahead in terms of its nearest rivals like YouTube, iTunes and Amazon video services. HBO Go, which allows subscribers to stream content on mobile devices, was not even among the top 10.

Deal with Comcast contributing

Netflix, Inc. (NASDAQ:NFLX)’s rising share of internet traffic follows the deal with Comcast and Verizon, where the streaming company agreed to pay for direct access to their networks. Prior to the deal, some Verizon and Comcast customers have complained for months about the slow and poor quality Netflix streams, which was primarily due to overcrowding in the network. For quite some time now, Netflix and the ISPs were in a tussle over the issue of who will bear the cost to improve the infrastructure. Eventually, the streaming company gave up and agreed to pay Verizon and Comcast for priority.

According to the Netflix, Inc. (NASDAQ:NFLX) monthly data release, after the deal with Comcast, the streaming speed performance has improved. The deal with Verizon is not yet reflected in the numbers as the agreement was entered late April.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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