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Netflix: Bigger Than You Think

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Heads turned when Netflix (Nasdaq: NFLX  ) streams consumed one-fifth of the country's downstream traffic last fall. Now, the company's outgrown even that gargantuan number.

Sandvine -- the same residential broadband networking specialist that issued last year's report -- now grants Netflix an even bigger chunk of the nation's Internet traffic. The couch-potato fave most recently accounted for 29.7% of all downstream bandwidth during peak hours.

To put this into perspective, that's nearly three times the data being served through Google's (Nasdaq: GOOG  ) YouTube during the same period.

Keep in mind that we're talking about raw data here. Netflix media files are chunky, optimized to look killer on your high-def flat screen. YouTube can get by with much smaller files. Still, that doesn't make Netflix's reach any less enormous.

If it wasn't obvious before, now we know why content delivery networks Akamai (Nasdaq: AKAM  ) , Limelight Networks (Nasdaq: LLNW  ) , and Level 3 (Nasdaq: LVLT  ) have been brokering cutthroat deals to get a piece of Netflix's streaming action.

Netflix's digital stronghold also explains why studios aren't hesitating to cut content licensing deals with CEO Reed Hastings, even if they fear Netflix as a competitor. It's also no surprise to see Netflix talking down capped bandwidth plans, and becoming a vocal player in the net neutrality battle. Ensuring that its customers have unfettered access to plentiful bandwidth just makes good business sense for the ever-growing video giant.

How much bigger can Netflix get? Share your thoughts in the comment box below.

Motley Fool newsletter services have recommended Google, Akamai Technologies, and Netflix. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days

Longtime Fool contributor Rick Munarriz has been a Netflix shareholder -- and subscriber -- since 2002. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (8)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 17, 2011, at 3:26 PM, poyntek wrote:

    I love Netflix, I watch it all the time. I almost never watch cable TV anymore. If you have a Roku box it is possible to record what you are watching to DVD like this...


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