On-demand surge: Netflix movies account for 30% peak Internet traffic in US

A new study has revealed that Netflix movies and TV shows account for a lion's share of peak hour Internet traffic within the United States.

The Sandvine Inc study shows that web browsing now accounts for only less than 17 percent of peak hour traffic, with Netflix movies and TV shows shattering the lead held by web browsing and peer-to-peer file sharing even late into the last year.

As of 2010, the traffic share of web browsing and illegal file sharing to trade copyrighted movies was much larger than Netflix traffic, according to the study by the internet delivery system equipment maker.

Netflix, whose customer base has been growing quickly, had 23.6 million subscribers in the U.S. as of March, the Global Internet Phenomena report said.

Netflix recently signed a number of agreements to build its streaming offerings repertoire, Reuters reported last month. These included agreements with Lionsgate for Mad Men, with Fox for Glee, and with CBS for shows such as Cheers and Frasier.

Netflix is now the unquestioned king of North America’s fixed access networks, the study said. Despite the emergence of an 'on-demand' mentality, P2P networks have maintained a relatively consistent share of Internet traffic, and absolute volumes continue to increase.

Opinions no doubt remain divided as to whether P2P's staying power is evidence of widespread piracy or mainstream acceptance of the ease of distribution that P2P networks like BitTorrent provide for content creators, the report added.

Over the past year, the company's stock has skyrocketed, going from roughly $50 per share to $250 per share in less than a year and a half. However, the stocks nosedived after the earning call though the results had exceeded expectations.

Netflix has admitted that it is facing tougher competition. It said during the recent earnings call that the number of new subscribers won't continue to nearly double each quarter.

We think that new services from Hulu, Amazon, Google TV and Apple, as well as the potential launch of a Dish Network/Blockbuster streaming service, each have the potential to create a bidding war for a relatively small amount of available content, and have even greater potential to create pricing pressure on subscriptions, Michael Pachter Wedbush Securities, said in a note.

The Sandvine report says the rapid success of Netflix shows the way for Internet providers worldwide. Internet providers worldwide, regardless of access technology and degree of mobility, must plan for a future in which on-demand video (whether provided by Netflix or another service) is a large proportion, if not the majority of, last-mile traffic, the report says.