The Olympic's Impact on Web Traffic

By Ray Deck August 03, 2012

The quadrennial worldwide sporting completion is making its presence known on the Internet. Last week, many scoffed at Reed Hastings, CEO of Netflix, when he expressed concerns that the Olympics might hinder the company's earnings projections. It now seems as if his concerns were more real than anyone realized.

On Sunday, the second day of Olympic competition, Netflix reported a 25 percent drop in its streaming traffic. Simultaneously, NBC reported a 100 percent increase in streaming traffic on its NBCOlympics.com. It doesn't take a statistician to realize that the Olympics are pulling traffic away from entertainment services like Netflix. Cam Cullen of Procera, a research firm that tracks broadband usage, wrote, "With the peak levels that we mentioned earlier for Olympics streaming, something had to give, and in this case it was Netflix."

Though one night's traffic isn't likely to affect Netflix' bottom line, a few weeks of Olympics watching could cause some Netflix customers to allow their subscriptions to lapse. Hastings cited the Olympics in as a primary contributor in a mid-quarter projection that points to Netflix losing ground in both subscriptions and streaming hours.

Conversely, the Olympics have offered a traffic boost to social networks like Facebook and Twitter which rose collectively by 25 percent in the first two days of competition. Many Americans seem to be watching the Olympics to the neglect of other entertainment options, as well as looking to social networking sites as a source of news.

In short, social media traffic is up and Internet video is down. The one exception being YouTube which has been posting normal traffic numbers for the duration. This may be due to the fact that NBC's streaming is in large part powered by YouTube.

Speculation about subscriber attrition is just that: speculatory. The long space between Olympic events has made it difficult for market analysts to project the event's impact on market conditions that are 24 months removed from the last similar event.




Edited by Jamie Epstein

TechZone360 Contributing Writer

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