The physical and digital movie rental service has sprinted to the 20 million subscriber mark, flicking off the threats of local DVD rental chains and tech giants with streaming intentions.
It has defeated fears of obsolescence stemming from restrictive release windows on new titles, major studios reluctant to feed Netflix's digital catalog, and the smarter wave of combatants aping Netflix's unlimited streaming buffet.
Even the mighty Superman had his kryptonite, though. In Netflix's case, its downfall may come at the hands of broadband data caps.
There's a slap for that
Broadband Reports is confirming that AT&T
AT&T is tiptoeing into these restrictive waters. It won't begin hitting customers with a charge of $10 for every extra 50 gigs of monthly data they consume right away. The overage charges won't kick in until the third time that a customer is over the cap.
In other words, it's not some sinister Machiavellian move. Other broadband providers testing out usage caps have experimented with dramatically reducing bandwidth speeds when accounts max out, if not booting its biggest data hogs entirely. This has been going on for three years.
I still don't like it, and neither will Netflix, along with any other company relying on home-based Wi-Fi connectivity to make a living. Consumers behave differently when the meter's ticking. When it's no longer a brainless notion to stream Pandora, Hulu, or Netflix, value propositions start to deteriorate.
Two sides to every bandwidth story
AT&T is claiming that just 2% of its users will be affected by the move, with its average DSL customer only going through 18 gigs of data a month.
Cranking out supporting statistics isn't new for AT&T. It's exactly what it did when it nixed unlimited wireless data plans last year. AT&T claimed that just 2% of its smartphone customers were sucking up more than 2 gigabytes of data a month on its network.
However, here's where hypocrisy meets an ironic Nostradamus.
"Customers can also use unlimited Wi-Fi at home, in the office or elsewhere if available," AT&T pointed out during last year's press release that axed unlimited data plans for new smartphone customers.
Well, it's pulling that rug from users in a few weeks.
Not everyone was an incensed as I was during AT&T's original cap shoot. Some readers went on to comment how they didn't consume a lot of 3G data on AT&T because they switched over to speedier Wi-Fi at home.
"This is just the beginning," I wrote at the time. "The limits will begin to work their way through broadband providers, too. Once it becomes acceptable to sell broadband by the gigabyte, what will stop them from adopting similar pricing plans for home Internet users?"
Nailed it, huh?
Bait and router switch
This isn't some rant by some spoiled brat who thinks that he has a God-given right to unlimited data. I think a smorgasbord has every right to switch to a "food by the pound" dining establishment.
We've been hoodwinked, though. We've been buying netbooks, Wi-Fi tablets, and Web-tethered home theater appliances -- as well as subscribing to streaming video and music services -- under the value proposition that one broadband data plan can keep all of gadgetry connected.
Now every purchase is going to come with the caveat that we price in its actual data consumption the same way we count calories or buy a new car based on mileage rates. Netflix and Hulu Plus will be the initial victims, but then comes tablet leader Apple
We probably should have seen this coming a few months ago, when Comcast
How about you?
You may not go through dozens of Netflix streams a month, but odds are that you are going through more now than you did a year or two ago. Chunky data files are now working their way through the pipes to feed your TV, tablet, and iPod touch with rich multimedia. The 18 gigabytes of data that the average AT&T DSL customer is eating through a month will only ramp higher in the coming months, but the pace will slow now that taxicab meters are being virtually stapled to home routers.
The revolution isn't dead, but it will pay the price of consumption awareness.
Is metered broadband data as big a deal as Rick thinks? Share your thoughts in the comment box below.
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Longtime Fool contributor Rick Munarriz is thankful that he's not on AT&T for his home broadband, and now will make it a point to boot door-to-door peddlers of U-Verse or AT&T broadband from his porch. He does not own shares in any of the companies in this story, except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.