Netflix will dominate internet traffic for years, says Sandvine report

“Competing video services such as Amazon, Hulu and HBO Go ” says a new report from Sandvine, “are often mentioned in the same breath as Netflix, but the data shows these services are unlikely to challenge Netflix for market dominance anytime soon.” Waterloo-based network policy management company Sandvine yesterday released its semiannual Internet traffic trends report, called the “Global Internet Phenomena Report 2H2012″.

Sandvine pulls the data from a selection of its customers in North America, Europe, Middle East and Africa, Caribbean and Latin America and Asia-Pacific.

Sandvine CEO Dave Caputo said internet traffic is still growing rapidly, thus putting demand on strained networks.

“There is only one digital network being built today and that is the Internet,” he said, adding: “With a 120% growth rate there is no doubt that more communications service providers will be launching application-based pricing plans that provide cost certainty and a consistent quality of experience for high-demand applications. Understanding the application make-up of a network is a critical first step in launching new services.”

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One of the findings of the report is that Netflix, which now accounts for a whopping 33% of peak period downstream traffic, will continue to dominate. “Competing video services such as Amazon (1.75%), Hulu (1.38%) and HBO Go (0.52%)” says the report, “are often mentioned in the same breath as Netflix, but the data shows these services are unlikely to challenge Netflix for market dominance anytime soon.”

Netflix, which was was established in 1997 as a mail-only movie rental service, is widely credited with bankrupting competitor BlockBuster. The company now has more than 30-million subscribers to its digital service, which is available in 51 countries. The service launched in Canada in September, 2010.

Perhaps surprisingly the report says torrent traffic, a phenomenon that has driven some internet providers to consider implementing usage-based billing, is slowly petering off. The largest torrent service, BitTorrent, fell to 10.31% of total peak traffic down from 11.30% just six months ago. The report adds that filesharing overall is in decline, falling from 19.2% to just 12% of peak period traffic since 2010.

The Sandvine report requires registration, which we found to be painless and well worth the piles of interesting tidbits it contains. It’s available here.