There has been substantial buzz over the last week or so about Netflix (NASDAQ:NFLX, news, filings) and complaints from users about streaming difficulties. As one might expect, some of the difficulties are simple confusion, but the phenomenon has been enough to prompt Netflix to respond on its blog. Essentially, he blamed the ISPs for congestion problems in their networks. That much should be obvious, it's rather hard to see Netflix deliberately slowing down its own service on some clients and not on others. But this relatively minor flurry of criticism may foreshadow something Netflix's growing service is going to be facing all year. Put together these pieces:
- Success: They're gaining ground. While nobody wants to fail, leading the pack means one wears the yellow jersey and becomes a target.
- Sensitivity to congestion: High resolution streaming is the first thing to break up when the network is overloaded.
- Passive resistance: For all the worries about deep packet inspection and deliberate traffic shaping, all ISPs really need to do is slow the upgrades and run their networks hotter.
- The Economy: The best possible smokescreen for an ISP looking for a reason not to help, and they are already running those networks hotter every day.
- The Age of Twitter: It just doesn't take much these days to cause an online riot. A little congestion last week generated a great deal of complaints, just imagine if someone decides to stoke such fires on purpose.
In other words, ISPs have an easy game plan here, it just falls out of the strategic situation. They will run their networks just hot enough to cause streaming to hiccup here and there, but not to interrupt voice or normal browsing. That will generate a constant buzz of complaints with or without help. They will put their own CDN nodes closer in their networks to the consumer so their own services don't have the same problem. Then anytime blame falls on them they will blame spending constraints and suggest that Netflix buy CDN services from them instead of the competition to alleviate the problem - 0r of course that consumers just buy from them directly of course.
Because Netflix doesn't own the network, they have two avenues to pursue and are already doing so. 1) Use PR (and blogs etc) to make sure everyone knows it is the ISPs fault, and 2) use the internet better to find more pathways around congestion to the consumer (their multi-sourcing initiative). They also have some allies in the CDNs without eyeballs, such as their current partners Limelight Networks (NASDAQ:LLNW, news, filings) and Level 3 Communications (NYSE:LVLT, news, filings) who would definitely prefer that over-the-top streaming be successful.
Netflix may be headed for open warfare with some heavy hitters, I hope they are ready for it. On the other hand, the alternative is to not be so successful. Better to take the battle to them rather than to never step on the field.
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