Can Netflix survive as an independent, or will Verizon sink it like Napster?

Verizon, Redbox announce partnership even as Netflix content thins

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There are a lot of ways to judge how popular an Internet service is.

One is to measure how much traffic it generates across open Internet links, especially during peak hours that conform roughly with prime-time TV viewing hours in the U.S.

By that metric, Netflix is the most popular thing on the Internet.

According to Sandvine, Inc., which makes network-management products for carriers and publishes reports on Internet usage, video traffic from Netflix makes up 32.7 percent of all the traffic flowing across the 'net during prime time.

That number, from the most recent Sandvine report, in late October, is 37 percent higher than the previous October, when Netflix made up only 20.6 percent of all the traffic online during peak hours.

Netflix' popularity, and relatively low price even after its big price split last fall, shows how eager consumers are to watch what they want to watch when they want to watch it – rather than engaging Video on Demand at absurdly high prices, awkward interfaces and limited content menus, which is what they get from most carriers.

Netflix is vulnerable right now. Ever since Netflix lost Starz as a primary content provider its listings have been thin and the number of exciting new movies and TV shows has been disappointing.

Since then Netflix has had to deal with the still-undetermined regulation of the ISP business by the FCC -- regulations lobbying by Verizon, Comcast and other carriers skewed so the rules give them a loophole to continue throttling traffic, speeding every kind of content except that from Netflix.com and all the other technical tricks that can be used as anti-competitive weapons.

Now it has to deal with yet another major competitor, this time from Verizon itself, which just formed a joint venture with Coinstar, Inc., which replaced BlockBuster as the physical-movie-medium rental source of choice by putting its Redbox vending machines in retail stores in 34,000 locations nationwide.

Photo Credit: 

Reuters/Fred Prouser

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