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Netflix gets asked to chill, but investors are just glad it doesn't have ads

Snacks / Thursday, March 19, 2020
"_I thought I told you, no more HD_"
"_I thought I told you, no more HD_"

Netflixing while stretching and video-conferencing... That Love is Blind episode might be coming in a little fuzzier than usual. Netflix is a leader of the "stay-at-home" stock pack, and we've been doing a preternatural amount of staying-at-home lately. So the EU asked it to stop streaming HD video to "secure internet access for all" — aka, not break the internet:

  • The EU Commissioner literally called Netflix CEO Reed Hastings to tell him to cut out the HD stuff because it's causing an internet traffic jam. He even started a hashtag for it: #SwitchtoStandard.
  • At least for the next month, Netflix will reduce its streaming quality in Europe. Because not being able to stream in HD is probably the least of our problems. Plus...
  • Videos account for a massive bulk of network traffic, like a giant weight on the internet's back. Netflix's HD vids use 3GB of data/hour, as opposed to 1GB/hour for standard def.

Netflix isn't the only one pushing the web's limits... Facebook also had a massive viral-surge in usage for its "family of apps" (Instagram, WhatsApp, Facebook, Messenger) — and it admitted it's being stretched to the limits of its tech infrastructure. Google, which is now offering its enterprise WFH software for free, has been working on increasing its capacity, too.

While media usage is surging, media is not equal... The key difference is in the business model: Google/Facebook/Snapchat rely on ad sales, while Netflix has a subscription-based model (starting at $8.99/month). If the economy hits recession, advertisers are expected to cut back on their ad budgets. That's a threat to ad-based biz models — Netflix's subscription-focus might be more reliable in the long-term.

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