BitTorrent is losing ground to Netflix, Inc. (NASDAQ:NFLX), according to Sandvine's latest survey comparing the largest consumers of downstream Internet traffic. The message? More users are turning to legal forms of streaming, and most of those seem to be turning to Netflix. Fool contributor Tim Beyers explains the implications in the following video.
Netflix has become for the movie and TV business what iTunes was for the music business years ago: a legitimate streaming outlet that's given users reason to cut back on BitTorrent, which can be used for distributing copyrighted material illegally.
Users have cut back on BitTorrent as a result. A November study from Sandvine found that traffic on the file-sharing system had declined some 20% during the prior six months. Ten years ago, BitTorrent accounted for 60% of Internet traffic.
Now, it's Netflix that's king of prime time. Sandvine's latest data shows the company accounting for 34% of "downstream" traffic such as video-on-demand, and 31% of all traffic, versus just 6% for BitTorrent, and 12% for YouTube.
How should investors react to this news? With a dose of humility, Tim says. Netflix has been leading the prime-time traffic wars for a while. Only a material jump in its share -- think 25% or more -- would impact the stock price at current levels.
Now it's your turn to weigh in. How often do you watch Netflix during peak Internet hours? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short Netflix stock at current prices.
Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
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