Netflix as an alternative to cable has gained a lot of ground over the last couple years, and with good reason. There's enough content for anybody's tastes, it's available at a bargain price over cable, and there isn't even any kind of commercial interruption. That adds up to a “what's not to like?” scenario, and indeed, the user base is responding in grand style, bringing up an average use of around 93 minutes a day, or about 45 gigabytes' worth of streaming video data every month.
The reports pointing out these facts—and plenty of others—came from a report from The Diffusion Group, which not only provided the current numbers, but also a note of comparison. Essentially, over the course of the last 10 quarters, the average amount of time spent streaming on Netflix has increased around 350 percent total. Yet despite this, the increase hasn't been a straight-line progression. While time never really decreased, there were times when it was level, comparatively. There's a substantial jump from the fourth quarter of 2011 to the second quarter of 2012, but then the first quarter of 2013 is almost identical to the second quarter of 2012. From there, the figures ramp up substantially, with every report from Netflix showing clear gains over the preceding report.
One key driver of this development, however, comes from Netflix's international expansion, a process which is still ongoing but is meeting with what looks like universal acclaim as it arrives in new countries. Indeed, while in the third quarter of 2011, 94 percent of Netflix streaming traffic came from the United States, that number fell to 72 percent just in the second quarter of 2014. With markets like France and Germany coming online, the total will likely continue to rise and the United States' proportion of the total will likely continue to fall.
But the bandwidth is likely what's set to prove the biggest issue. With issues of net neutrality still weighing heavily on the market, and competitors like Google Fiber waiting in the wings, this illustrates that the problem isn't likely to go away any time soon. But the question will be how Internet service providers (ISPs) can possibly respond. Worse, the problem won't be getting better, but rather only getting worse for ISPs. Netflix has recently noted that a 4K stream—the newest high in high-resolution—can consume as much as seven gigabytes of data in just one hour.
Right now, that's not so much a problem, as not that many users have 4K systems, nor is there all that much available in 4K content. But as the prices on 4K systems drop as is generally regarded as inevitable, and more and more content comes online, ISPs are going to have to prepare, somehow, for the kind of impact this represents, and none of the choices look good. ISPs can add caps, forcing limits on user viewing, but as soon as one competitor doesn't do that, all the users flood that competitor, resulting in big losses for the laggards. ISPs can add on to capacity, but that's an expensive proposition that may not recoup investment for months, even years.
The key point here is simple enough: there are more uses for bandwidth emerging with every passing day, and streaming video is one of the biggest. With more content available on a regular basis and bandwidth availability not seeming to change much, something will have to give here. The question remains, just what will give first?