Netflix Inc. (NASDAQ: NFLX) accounts for 15% of the global internet’s traffic. It does so by streaming video to over 125 million users.
According to research firm Sandvine’s Global Internet Phenomena Report, video is responsible for 58% of internet traffic. This is based on “downstream” traffic, which is data received by a PC, tablet, smartphone or other devices that can play video. The web has 17% share of traffic, according to the research firm. This is use of the web to move non-video applications. Gaming takes up another 8%, followed by social media at 5%.
One reason Netflix dominates the sector is that it is unavailable in only four of the countries Sandvine covers. However, the data does not include China and India. China is the world’s largest internet market. Sandvine says its information is based on data that covers 2.1 billion subscribers to internet applications that it can measure.
Among the most important conclusions of the report is that the internet is overtaxed. Regulatory issues are one reason. Another is the investment made in networks. The report indicates that neither of these problems is likely to go away soon. Cam Cullen, Sandvine’s vice president of marketing, points out “Different applications require different network resources to achieve good quality, and without accurate visibility into network traffic composition, network operators cannot deliver for consumers.”
One reason Netflix consumers use so much of the internet’s capacity is that video files are so much larger than text. Among the limitations of how fast a movie can be downloaded is connection speed. A 4G connected device may post a speed as fast a wireline internet connection. However, service providers can limit connection speeds, both to mobile devices and to homes and businesses. Providers do this, in part, to avoid congestion on their networks.
Netflix is not the only large consumer of video traffic. Sandvine points out that Amazon Prime is among the top five consumers of internet traffic. YouTube is also a large consumer.
What is the future of Netflix internet traffic consumption? Netflix forecasts it will add 10 million new subscribers in the current quarter, compared to the quarter just before it. Given that, its use of internet capacity is unlikely to drop anytime soon.