Share this Article
This past July, Netflix announced changes to their pricing and package structure. This announcement caused a subscriber backlash, with many users threatening to cancel their service. FierceCable recently summarized the company's woes, complete with a timeline, in an article entitled, "Netflix's fall from grace: can it recover?"
This leads to the interesting question, have we seen "peak Netflix"? In other words, has Netflix traffic reached a maximum as a share of total Internet traffic in the United States? With so many Netflix-capable devices, the addressable market for the service is already enormous and will only increase, so it's hard to envision a scenario in which absolute levels of Netflix will decline. However, Netflix is facing increased local competition, and as a result new services might grow at a faster rate. Globally, Netflix will grow – the service is available in almost 50 countries and the company is aggressively pursuing licensing deals with locally-focused content – but in the United States specifically, we might have seen the peak.
Top trends noted and discussed in detail for service providers include: increased Netflix and over-the-top services adoption, the market penetration of revenue-replacement applications, the overall increase in mobile marketplaces, and the impact of Internet-ready consumer electronics devices.
Multiple Screens drive Multiple Streams
Subscribers are watching Real-Time Entertainment on an increasing number of screens. In many households you could very easily find a laptop or desktop computer, a smartphone, a tablet, and a TV with direct (smart TVs) or indirect (via a game console or set-top) Internet connectivity. When subscribers watching online video are free to choose between screens, they generally choose to watch content on the largest screen available to them. A TV offers a better viewing experience than a computer, a tablet is preferred over a smartphone, and a smartphone is superior to nothing at all.
Click button below to read more.
Screen size also has direct correlation to data usage. For example, when watching a video on a 60-inch HD capable plasma screen, most subscribers will opt for the highest video fidelity available. In that same scenario, higherquality audio might also be provided to the home theatre system. With so many screens available in a household it is also easy to imagine a situation where multiple streams occur simultaneously, like one individual watching a high definition Netflix movie on the primary television while another is flipping through YouTube clips on a tablet. Many services encourage this behaviour: for instance, Netflix, which offers some of the highest quality streams available, allows two concurrent streams. Netflix have also openly discussed the idea of a family plan which would allow multiple streams of multiple programs simultaneously.
This increasing number of concurrent streams has the potential to severely disrupt network capacity planning models and service plan design and price. With Real-Time Entertainment usage focused during an ever-shrinking peak period, network planning that fails to account for simultaneous streaming will manifest as a poor video quality of experience visible to every subscriber in the home.
More Real-Time Entertainment bytes (55%) are destined for game consoles, smart TVs, handhelds and mobile devices than to desktop and laptop computers (45%). Consequently, many content producers, equipment vendors and communications service providers have adapted a "three screen" strategy to deliver content to TVs, computers and mobile devices.
“The fact that more video traffic is going to devices other than a PC should be a wake-up call that counting bytes is no longer sufficient for network planning. Communications Service Providers need to have detailed business intelligence on not only the devices being used but also the quality and length of the videos being watched so they can engineer for a high subscriber quality of experience and not simply adding capacity through continuous capital investment,” said Dave Caputo, CEO, Sandvine.
“Mobile operators are facing a reality of network costs that are increasing much faster than revenue – to bridge this gap, forward-thinking operators are also using Sandvine’s Usage Management product to launch premium services that guarantee unlimited usage of the applications that are most popular with subscribers. These packages offer a win-win arrangement: subscribers can confidently use their favorite applications, with the comfort of price certainty, while operators can cover the costs associated with delivering those services to the end user,” said Dave Caputo. “In addition, overall monthly consumption is more concentrated during the evening’s peak hours, so service providers may also consider offering service plans that shift usage to off-peak hours.”
Major findings from the report include:
Sandvine’s publically-available Global Internet Phenomena reports are made available through Sandvine’s Network Analytics product, including the newly-launched Real-Time Entertainment Dashboard, which provides granular insight into streaming audio and video traffic. Ultimately, service providers invest in their networks to deliver a valued service to their end users, and the video QoE metric lets network operators see the return on their capacity planning and congestion management investments.