Perhaps it was karmic push-back from the Internet. On Thursday, Netflix's web site went offline, one day after a new report indicated the movie service accounts for more than 20 percent of all U.S. Internet traffic during peak times.
A spokesperson for the company said the outage began late morning, local time, for the Los Gatos, Calif.-based company. No reason was indicated, but the company did say it was an internal technical problem.
'Primarily a Streaming Company'
Netflix, originally begun as DVD-by-mail service, has increasingly become a leading source of streaming movies and other content. The outage meant the streaming service was interrupted, and its nearly 17 million subscribers couldn't order DVDs online. DVDs previously ordered were shipped as scheduled.
The company said earlier this week that it has been experiencing huge growth, with a subscription base that grew 52 percent in the third quarter compared to the same quarter last year. It was the fourth consecutive quarter with more than one million net subscriber additions, and the company said the growth was "clearly driven by the strength of our streaming offering." Compared to the second quarter, the growth rate was a robust 13 percent, and revenue for the third quarter stood at more than $553 million.
"In fact," said Netflix cofounder and CEO Reed Hastings, "we are now primarily a streaming company that also offers DVDs by mail."
The increasing number of people who are watching "instant" streaming movie and TV content gives a clue why the Internet is becoming Netflix. The company said the percentage of subscribers who watched a streaming TV show or a movie in the just-completed third quarter was 66 percent, compared to 41 percent for the same period last year. This was a five percent increase over the previous quarter.
In Canada, 95 Percent
In fact, by the fourth quarter of this year, more Netflix subscribers will watch streaming content than will watch movies delivered as DVDs. The company said that, given that it is now a "mostly streaming" company," this is the last time it will report the relative number of streaming versus DVD-watching subscribers.
The finding that Netflix has become the 600-pound gorilla of Internet bandwidth came from Sandvine, a provider of intelligent broadband network solutions that has launched an Internet traffic-trends report.
The report, called Fall 2010 Global Internet Phenomena, covers the Asia-Pacific, Europe, Latin America, and North America regions, and is based on 200 service providers in more than 80 countries. The report found that Netflix' heaviest usage is between 8 p.m. and 10 p.m.
Netflix' impact on Internet traffic is even greater in Canada, where its streaming service recently started. Sandvine reported that, at the peak 9:30 pm time, the movie service occupies 95 percent of all bandwidth.