Netflix Plans to De-clog the Internet’s Bandwidth

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At peak hours, Netflix makes up a whopping 37% of all internet traffic in North America, which is a huge congestion problem. Now it appears that it may have found an answer.

Netflix has been quietly testing a new way to deliver all the streaming content on its servers, without sacrificing video-quality for movies. Each episode of “The Office” was encoded at several different qualities which could shift according to variations in a customer’s connection. That way it can max out on the actual quality the viewer sees without causing artifacts or pixelization. Years ago, when they adopted this algorithm, Netflix developed what’s called a bitrate ladder. Some of those gains come from changing that up and compressing things like cartoons down further and more efficiently, while making sure that things like action movies still get all the love they deserve.

Without seeing this plan in action, we can’t yet say whether the process truly makes for a better or worse viewing experience; maybe the difference is as indiscernible as Netflix claims. But that “one-size-fits-all” fixed bitrate ladder didn’t account for scenes with high camera noise film grain noise, meaning that even a 5800 kbps stream would still “exhibit blockiness in the noisy areas”.

Netflix is now busy re-encoding its entire library, which is a massive undertaking. Also on some slow connections the video quality often dropped to 480p. Previously, the same watcher would have just been able to watch the show with a resolution of 720×480, and still used more data.

As a whole, the new model should give Netflix customers better-looking content while using 20% less bandwidth.

That’s Huge!

Google announced good but not spectacular Q2 numbers last week (if you can call $14Bn revenue “not spectacular”), and the Wall Street pundits will no doubt gnash their teeth over what could be considered a minor miss. I thought the fact that big G. is spending roughly $3Bn in revenue shares to publishers was fascinating. That’s a number they could so easily increase, and in doing so, drive their top and bottom lines even higher. However, instead of opening the flood gates a little wider and allowing a few more publishers to dine at the top table they remain determinedly focused on keeping as many marbles as they can, which in return limits their ability to grow as fast as the market would like. Truth be told, there is actually a ton of great traffic and revenue out there (including mobile) which Google is not taking advantage of. I completely understand and respect that they hold the quality of the product they offer to their advertisers sacred, but with the extreme checks and balances they have a place to be secure. The purity of the church could allow more in to dine, and greatly increase their own revenues at the same time.

The other striking Google data point is that it now serves roughly 25% of all internet traffic in the U.S. That’s kind of amazing… over 60% of us use at least one Google service every day and they serve more stuff per day than Facebook, Netflix, and Twitter combined. At peak usage (the evening movie spot), Netflix takes up about 30% of the US Internet. However, I guess if we average it all out and add in YouTube, it makes sense that Google does indeed carry that much load. That entire cost is essentially funded by Google Ad revenues, which has been under pressure of late… another good reason why the powers that be, might take another look at letting a few more of us mere mortals dine at the top table.

Still Destroying Major Markets; Internet Turns 30

The Internet was more or less officially born Jan 1st 1983. Back then I was just out of college selling advertising for a major London magazine using a rotary dial phone and paper index cards. It feels like a million years ago. Back then we enjoyed creative content through, commercial soaked radio stations, dead tree products like newspapers, network TV, vinyl records or tapes and VHS all of which we paid through the nose for through commercials or fairly large stacks of dollar bills. The networks could deliver vast prime time audiences, record companies, newspapers and movie makers were rich and powerful media giants and if you wanted to find something you had to go look it up at the library. A year or so later as a wet behind the ears sales guy if I wanted to send a sales letter I dictated it to a secretary and send it by snail mail.

As we start 2013 we are looking at a radically different landscape. Mobile will probably surpass desktops in terms of users and search, music has devolved to a medieval state where the only way for minstrels to make money is to play live for a line audience and movies are headed that way too. Newspapers are barely worth the paper they are printed on, the yellow book industry is almost gone, content piracy continues to impact multiple markets and as always the web mediates these processes. In spite of the fact that Google removed over 50 million URLs from their results last year (mostly in response to appeals from RIAA) it’s results continue to be chock full of pirated content and the sites promoting “sharing” through torrenting continue to feature ads served by the major search engines and ad networks.

An interesting side effect of this slow rolling revolution is the impact of the web on advertising as a whole. For example; I recently purchased roughly 75 episodes of Big Bang Theory on iTunes to watch on long flights. Each episode costs about $1 and buying them saved me watching or zapping through roughly 15 hours of ads. I have seen believable data which puts my value as an ad viewer at about 5c per 30 second commercial. That mean that by spending $75 to own the content the network lost about $18 of advertising, a pretty good deal for the network even factoring in fees to iTunes etc. This equation of trading dollars for interruption through platforms like iTunes, Netflix and Amazon Prime will likely continue to drive the advertising world half insane in 2013. Add to that that the pervasive but confounding social media it’s clear that the Internet will continue to confuse advertisers who traditionally move at a glacial pace.

At the same time the web has obliterated music, yellow books and newspapers it has given birth to massive new markets, freed us from the sway of media giants who often don’t have our best interests at heart, facilitated real social and political change and as a bonus allows us to live pretty much commercial free if we choose to. It has put the information of a large chunk of humanity at our finger tips and allows us to be much more connected with family and friends if we choose to be. I experienced this myself just last week in London. By some oversight I didn’t have the UK added to my data roam program, so I found myself in London unable to call, search, navigate or email for as long as it took me to resolve with Verizon….about 6 hours. Those were 6 of the most uncomfortable and confounding hours I have experienced recently. After 30 years the Internet married to mobility has truly addicted many of us to the point where being without it is just about unthinkable. Hi, I’m Tim and I’m and Internataholic….Hi Tim!  Here’s to the next 30 years

The Real Problem With Real Time

The recently closed Olympics illustrated several significant challenges faced by all media in this increasingly fast paced world. The time zone difference and the power of Twitter meant that anyone in the US who wanted to watch an event without the results being a foreknown conclusion pretty much had to put a bag on their head to avoid spoilers especially from social media. The scheduling was all over the place so finding the event you were looking for was tougher than usual. When the would-be sports fan finally made it to the event in their own time zone they then had to sit through what felt like endless prepackaged features on the US interest in that event. Then there were the commercials. Obviously NBC had to meek significant budget targets but the relentless and endless commercial interruptions drove me at least to the DVR to back up enough of the content to get through the event without serious mind damage or terminal boredom. In a media world characterized by real time content forcing the wired fan to sit through well produced by turgid content surely can’t fly for many more Olympics.

All the social media platforms did a pretty good job of allowing news and opinion to flow and over all I was impressed with the tone and quality of both the original content and secondary comment from followers. There were silly moments where side issues developed weird amounts of heat but overall it felt encouraging. What was missing was the next step in the evolution of this kind of content…the evolution to the new on-demand. Right now I can use I-tunes, Netflix or the lamentable options offered by Verizon Fios to stream movies and some TV shows. Depending on the provider, I can choose standard definition or HD, I can choose to rent or buy the content permanently. Let’s extend that paradigm to the Olympics. As a viewer I’d like to be able to see the event real time live and or I’d like to be able to see that event when and where I choose. I’d like to be able to see it at the resolution of my choice and I’d like the option to view it with or without commercials for a small fee. With those choices not only would I watch much more of the coverage I suspect that charging me a few cents to avoid the commercials is going to be more valuable to the networks than charging advertisers for my time. I have $50 says most if not all of the options above will be in place by the time of the next summer Olympics with some aspects showing up as soon as Sochi 2014.

On a side note I sat through the closing ceremony last night and I have a couple of observations. Over all I thought it was enormous and often pretty whacky fun….Lord only knows what large chunks of Humanity watching made of Eric Idle singing “Always look on the bright side of life” (complete with Roman Soldiers but minus Crucifixions). I have no idea why the Spice Girls bothered to reunite; they looked more like The Desperate Housewives than their old selves. What bothered me…and it probably shouldn’t have, but it did; is than in  a festival of Brit music and culture packed full of really quite good performances, with the notable exception of Freddy Mercury (who had a really good excuse not to be there) why were so many performers missing. Hats off to Annie Lenox for doing a killer performance but where was Dave Stewart? Half of the Who and 25% of Pink Floyd who did show up and added excitement just by being there but where was Bowie, Waters, Gilmore etc, etc.  I have to imagine they were all invited but couldn’t get over their artistic differences…did Bowie really have something better to do than play to a measurable percentage of all of Humanity? Was it a gym appointment (I hear he’s put on weight)? Had the Floyd bitten the bullet and played together they would have had to reinforce the stadium roof to keep it on. It was a missed opportunity…but even with that…one heck of a good show.