Netflix Streaming = 20% of peak Internet traffic in the US
sandvine.com
sandvine.com
I'm not entirely surprised that most streaming is 8-10pm, but in my family, it's all from 8am to 10am. The kids just have to watch the same Thomas and Caillou over and over again.
http://newteevee.com/2010/10/20/netflix-ceo-we-are-now-a-str...
Let's also assume that they spend 2 cents/gb on bandwith, so $1/50gb. 50gb * 500mil == 500 * 50pb == 25 exabytes.
Somebody with more knowledge: does the yearly US bandwidth sound like it's in the range of 125 exabytes?
Also, when you're doing as much traffic as Netflix is, then you should be measuring in line speed, not data transferred. Providers bill based on speed (by the Mbit or Gbit) because that represents best how much of their total capacity you're using. It doesn't cost them anything to transfer some amount of data, but it does cost them in the total amount of bandwidth they have left to sell to other customers.
At some level transfer quantity and rate are the same thing. A bit sent for customer A takes up space on the wire that can not be used for customer B, no matter how it's measured.
It's also unclear which line would be measured for purposes of Netflix's transfer rate. That's one of the beauties of the cloud... specific line transfer rates are abstracted away into an aggregate quantity of data.
If you're selling lines, you charge by rate. If you're selling transfer, you sell by bits.
Netflix is not paying $500 million a year for bandwidth.
Netflix's bandwidth pricing has been reported[1], as Akamai and Limelight jockey to try to capture more of Netflix's business.
[1] http://www.businessinsider.com/akamai-gets-more-of-netflixs-...
Spending on licensing the content is more than on streaming the content.
Revising a couple of your numbers[1], and then multiplying out:
((100 gigabytes) / (1 U.S. dollar)) * 50 million U.S. dollars = 4.65661287 exabytes
(((100 gigabytes) / (1 U.S. dollar)) * 50 million U.S. dollars) / (31 536 000 seconds) = 158.54896 GBps = 1.3 terabits
Articles reported Netflix was ~20% of traffic, suggesting ~6.3 terabits total traffic.
Akamai was reported hitting of 3.4 terabits[2], and is considered to be around 60% market share of delivery, suggesting ~5.75 terabits of total traffic.
These numbers are close enough to pass a sniff test.
[1] http://www.businessinsider.com/akamai-gets-more-of-netflixs-...
I'd be surprised if Netflix didn't have some arrangement with the major ISPs. On the other hand, if Netflix is doing just fine without having to worry about negotiating with ISPs to avoid throttling, then maybe it is still feasible to fund and launch a new high-bandwidth product.
What we're really seeing here is that the majority of the population is moving to internet video instead of their televisions. I imagine some TV networks want a technical guarantee that their video will be streamed uninterrupted by lag, at which point, it's only a matter of time 'till all video content is consumed.