Netflix usage in NZ & Aus already 100,000+ households

netflix, nzru, viper, deluge, global mode

Due to the popularity of our products we’re working with NZTE to look at international markets for our VIPER & DELUGE products which support Global Mode® and Buddy Guard. While exact numbers are confidential, Global Mode® is a dinner table conversation in New Zealand these days, why is that?

Each quarter Sandvine produces a global Internet Phenomena Report. The report highlights the overall use of broadband networks around the world, identifying facts, fads, and the future trends that will shape the Internet’s future.

Global Mode was launched as a product to prevent illegal downloading by removing the artificial barriers of the Internet that prevent people from streaming legitimate content based on out of date commercial models.

As to be expected streaming video and audio continues to be the largest category of internet traffic on all networks, anywhere in the world. At just over 2% market share Amazon Video, still sits well behind Netflix, who have around 1/3 of all online streaming traffic.

Things are changing as evidenced by HBO beginning to open up their streaming service to those who aren’t subscribers of their traditional products. We see the same thing in New Zealand with the introduction of SKY’s Neon service sometime soon, and while pricing is available, we have no real understanding if the offering. Will it will provide New Zealander’s what they want – access to live sports content.

Netflix director of corporate communications and technology has already admitted to the NBR its content offering in New Zealand will be a limited regional version of it’s fully featured North American offering. It remains to be seen if Netflix will capture it’s existing users, or just continue expand the online video market. Global Mode customers said publically on the Slingshot Facebook wall they would not switch to the US version. User said this was in part also because of the large number of other sites that were still not available to New Zealanders and with Global Mode region switching; consumers do not have to decide. Ultimately we see from our data users opt for more than just one streaming option, and are used to on-demand pricing to access shows like Netflix’s new series Marco Polo.

When Netflix is launching Marco Polo in December; one of the most expensive TV series ever made according to The New York Times at a cost of $90 million to produce ten episodes. But there is another reason Marco Polo is so important for Netflix. The series will appeal to international audiences as it expands, and Netflix will be keenly looking at Asian regions with this new unique content.

Netflix CEO Reed Hastings has predicted the on-demand streaming will cause broadcast TV to die off within the next 16 years saying the age of broadcast TV will probably last until 2030. When you consider multi-cast, caching and fibre deployments, I’d say he’s not far wrong that broadcast won’t be the preferred medium of choice.

Global brands like the NZRU who own the rights to the All Blacks franchise will be able to see much greater revenue by serving it’s customers directly. They’ll do this by delivering a feature-rich, interactive options to the living room via a smart TV, mobile content and even greater merchandise opportunities from e-commerce.

With over fifty million users, Netflix is largely responsible for changing how consumers watch TV shows and movies, and they’re only going to continue to disrupt.

Netflix will debut the sequel to “Crouching Tiger, Hidden Dragon” the same day as it hits IMAX theatres. With this move, Netflix is predicting it will start to break the stranglehold that movie theatres have on the model for how movies are released.

But really, are things changing that fast? If you look back file sharing uploads as a % of traffic have only continued to grow.

File sharing (upstream) has grown from 19% in March 2011 (see above) to 28% now (see below). So overall data volume used by P2P continued to grow 20% year over year. However, what is pleasing to see is the corresponding increase in legitimate streaming services from 49% in 2011 up to 67% today. When we look further, we see that in North America BitTorrent continues to lose share and now accounts for just 5% of traffic during the peak period at night.

In their last report, Sandvine revealed that filesharing as a whole accounted for less than 9% of total daily traffic; this latest release shows the downwards trend continues. BitTorrent is now only responsible for just 7% of daily network traffic.

Overall this demonstrates a sharp decline in share from the 31% of total traffic just was reported back in 2008. Clearly the strangled hold of cable TV monopolies has been broken in the US, and the impact of free choice for consumers is benefiting studios who licence their content through streaming providers. No wonder the cable operators are fighting so hard to restrict the open Internet.

While Europe and Latin America have still a horrid level of filesharing in Asia Pacific, the filesharing still represents the MAJORITY of traffic on the upstream. Sadly we are the only region in this report that can lay claim to that fact.

BitTorrent is now the second ranked downstream application in the Asia Pacific region during peak periods. While its decline in share has been somewhat less drastic than in North America. BNSL asserts that based on the evidence in the north American market the rate of decline may accelerate as more over-the-top streaming entertainment sources are made available to subscribers in the region.

Until then, you can only see evidence of the consumer demand in reports like this; despite not being available in region Netflix is a top-10 application on ISP networks.

Sandvine predicts approximately 2.5% of subscribers are accessing the service as it comprises as much as 4% of peak downstream traffic. This suggests that Netflix usage across all of Australia and New Zealand’s broadband subscribers could easily be an excess of 100,000 households.

The evidence is there, depending on the specific country the streaming services market share ranges between 20% to 67% of downstream traffic. The increase in streaming and decrease in file sharing is directly related to the availability of over the top video services like Netflix in varying countries, as well as the speed of broadband service made available to subscribers.

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