Netflix Traffic Now Bigger Than BitTorrent. Has Hollywood Won?

The amount of Netflix (s NFLX) data passed over ISP networks continues to grow, with its streaming service now making up more North American Internet traffic than even BitTorrent file sharing. While that might seem like a win for Hollywood studios that have spent the last several years fighting piracy, the traffic growth also comes at a time when ISPs are introducing bandwidth caps that could constrain Netflix streaming.
According to Sandvine’s latest Global Internet Phenomena Report, the subscription streaming service now accounts for 29.7 percent of all peak downstream traffic in North America. That’s up 44 percent from the previous figure released in Sandvine’s Fall Study just six months ago.
Even in Canada, where Netflix has only been operating a short time, the service has had a significant impact on data traffic. Despite launching just last September, Netflix now has more than 800,000 subscribers, accounting for about 10 percent of the country’s broadband subscribers. And it now accounts for about 13.5 percent of data traffic there.
But it’s not just during peak traffic hours that Netflix rules broadband networks in North America. According to Sandvine, even when averaged over the entire day, Netflix accounted for 22.2 percent of North American data traffic. That’s more than even more than BitTorrent, which accounted for 21.6 percent of traffic, and had long been the single largest component of data traffic on broadband networks.
One could argue that’s good news for Hollywood studios, which have spent the last several years trying to combat the spread of their movies on peer-to-peer networks like BitTorrent. And while Netflix taking up a bigger share of broadband downstream data transfer is preferable to P2P traffic, Sandvine is careful to note that BitTorrent traffic isn’t actually going away. P2P filesharing only saw a marginal drop in share, from 19.2 percent in the fall to 18.8 percent six months later. And while P2P has maintained a relatively constant share, the absolute volume of traffic continues to increase.
The news of Netflix’s traffic growth comes as it is faced with a number of ISPs implementing bandwidth caps that could impact how much viewers can stream over their broadband connections. Already, it lowered the quality of streams it delivers in Canada to deal with overly restrictive bandwidth caps in that market.
But Netflix isn’t taking the threat of bandwidth caps lying down: The streaming company met with the FCC last week and shared a letter its CEO Reed Hastings had penned about the impact that broadband caps have on it and other Internet firms. In it, Hastings argued that bandwidth caps represent a huge markup over the incremental cost of delivering streams to end users, and said such moves could stifle innovation on the Internet.