Solving for the Next Netflix Effect

By now the stats are well worn. Online video takes up a lot of network bandwidth, and Netflix streaming in particular accounts for more than a third of Internet traffic during peak viewing hours. That's a disaster for network operators, but one to which they've become pretty well accustomed.

There are options for managing the onslaught, including beefing up interconnection capacity and caching Netflix content directly in the last-mile access network. (See Could Netflix Someday Cache at Home?)

The big question, however, is will service providers be ready to deal with the next Netflix effect -- whether that's a change in Netflix streaming behavior, or the result of something bigger and badder coming to take its place?

Here are a few scenarios to consider.

1. Downloading -- It's a virtual certainty that Netflix Inc. (Nasdaq: NFLX) is planning a downloadable option for its video content in the near future. (See Netflix Queues Up Video Downloads.)

Depending on the extent of content availability, that could change the pattern of consumer use. For example, usage might actually go up for tablet users who wouldn't stream a show over a cellular connection because of data caps, but might download several titles over WiFi at home for later offline viewing.

Or, and no doubt content owners won't be happy about this, a consumer might load up a tablet for a friend or family member with a full season of House of Cards and then lend it out the way they might have lent a boxed set of DVDs ten years ago.

What do operators do if and when Netflix demand jumps even higher? Or when bandwidth demand starts spiking at unexpected times because users are setting their shows to download overnight?

Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.

2. Priority shift -- No other streaming service comes anywhere close to Netflix in bandwidth usage today. But customers are fickle. Think how quickly young consumers in particular jump from messaging platform to messaging platform. What if two or three of the next big TV series all hit a single platform at the same time? And what if that platform is Amazon, HBO or some yet-to-be-introduced service instead of Netflix?

For some operators, it won't matter if the platform shifts as long as bandwidth demand doesn't go up. But for others that have solved their bandwidth woes specifically by installing Netflix caching appliances in their networks, a switch to a different streaming service could come as a shock to the system. It would mean they were suddenly not caching the right content, or at least not all of the right content.

3. The next big thing -- Nobody knew that Pokémon Go would take off the way it did, and it may be equally difficult to predict the next big fad. However, once any type of high-resolution virtual reality applications take off, they could easily tip the balance on bandwidth usage into the danger zone. Some of the burden will fall on wireless carriers, particularly as 5G technology is adopted (which of course also requires fixed-line front haul capacity), but many VR applications, even mobile ones, will end up depending heavily on in-home WiFi networks, and the wireline ISPs that serve them.

So what might a tripling or quadrupling of bandwidth demand do to ISP networks? Infinite scale isn't on the roadmap, so for many operators the prospect of a multi-factor or even exponential leap in bandwidth demand requires a lot more preparation work today: building more capacity, developing smarter CDN strategies and continuing efforts to make networks more flexible and programmable.

Unfortunately, as much as we'd like to be able to predict the future, we're often not very good at it. The next Netflix effect? It could be right around the corner. But we won't know until we get there.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

steve q 8/25/2016 | 10:14:26 PM
Re: Downloaded content I see Netflix and all the other programming like HBO, ESPN and Hulu. Going to ask Verizon, Comcast if they have plan's to be able to support their customer that are going to use those internet service. Verizon new 5G is a first step but it is still in testing and with google going into a Wi-Fi service to help handle the cost still have a faster internet speed then FiOS. The other option for those streaming company is to sign on with the Tv maker and have them build a app into each Tv .
Kelsey Ziser 8/25/2016 | 4:11:34 PM
Downloaded content In regard to pt.1 about the possibility of subscribers downloading and sharing that content with friends/family, do you think that would affect the subscribership rate? Netflix's move to allowing multiple users under one account didn't have a noticable negative impact on their business, but could the ability to download content to multiple devices have an impact on subscribership or profits?
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