A new report from Ontario-based Sandvine indicates Netflix video streaming content currently accounts for the single greatest source of peak downstream Internet traffic in the U.S. (recently reported as 29.7 percent, up from 21 percent last fall).

According to TechCrunch: “That puts Netflix above HTTP websites (18 percent), BitTorrent (11 percent), and YouTube (10 percent) as a source of downstream traffic during peak times in North America. (BitTorrent still accounts for half of all upstream traffic). As whole, ‘real-time entertainment’ (which is mostly video streaming, but also includes streaming music) accounted for 49 percent of downstream traffic in March 2011, versus 19 percent for P2P file sharing, and 17 percent for Web browsing.”

The Global Internet Phenomena Report: Spring 2011 from Sandvine also offers the following observations:

• Real-Time Entertainment traffic is continuing its journey to network dominance, particularly in North America, where it represents 49.2% of peak period fixed access traffic. If this rate of growth is sustained, Real-Time Entertainment will make up 55-60% of traffic by the end of the year.
• The continued growth of Real-Time Entertainment enables a seemingly contradictory conclusion: P2P Filesharing is here to stay, at least for the immediate future, as evidenced by the marginal drop in share from 19.2% of peak period traffic in Fall 2010 to 18.8% in Spring 2011.
• The composition of upstream traffic on Latin America’s mobile networks has changed dramatically since the previous study. P2P Filesharing has supplanted Real-Time Entertainment to become the largest consumer of upstream capacity, accounting for 46.4% of uploaded bytes.
• Europe’s networks reflect rapidly shifting user preferences. Levels of P2P Filesharing and Web Browsing traffic have changed dramatically since 2009, with no consistent trend appearing. Nevertheless, an important exception in this dynamic market is the Real-Time Entertainment category, which continues to grow steadily.

Related Bloomberg article: “Netflix Offers Streaming Movies on Google Android Phones” (5/12/11)

A new app from Swedish start-up Spotify may attempt to take on Apple’s iTunes. The European online music service recently announced a new MP3 download store in addition to the ability to sync music on iPods and related devices.

According to a report last week on PCMag.com: “Spotify features include the ability to: search, browse, and play millions of tracks; stream over Wi-Fi or 2.5/3G; access offline playlists; on-the-fly sync; a what’s new tab; wireless sync of your local files to your phone; and the ability to tag favorites into a special list. One of the most frequent requests, however, was the abilty to sync that music to Apple’s iPod, something Spotify said is now a reality. Just connect an iPod to your computer via USB and it will appear in the ‘devices’ section of the Spotify sidebar. You can then sync MP3s in your Spotify playlists to the iPod.”

Spotify has 13 million tracks available and more than 1 million subscribers. It features a free, ad-supported option and a premium service for unlimited access. The company says that its iPhone and Android app can now be used by its free service customers.

Spotify is doing well in Europe, but has yet to launch in the U.S. It has inked deals with EMI and Sony for U.S. service and if it can enter into an agreement with Universal Music Group and Warner Music it may become a serious competitor for the likes of Rhapsody and iTunes.

Since Apple has a track record of updating software to prevent third-party iPod syncing, it will be interesting to see how it responds to Spotify’s efforts.

Updated ETCentric post (and Facebook-Spotify news): “Is Facebook Poised to become THE Social Entertainment Operating System?” (5/31/11)

Related Bloomberg Businessweek article: “Here’s Spotify’s Master Plan: Tackle iTunes Head On” (5/5/11)

Related CNET article: “Spotify cozies up to iPod, takes aim at iTunes” (5/4/11)

YouTube is going Hollywood with its new streaming VOD service that may provide some competition to services from the likes of iTunes, Hulu and Netflix. YouTube Movies now offers current mainstream features in addition to trailers, reviews, alternate endings, behind-the-scenes specials, cast interviews, and other extras. (You can browse current titles and check out the interface at the YouTube Movies page.)

This may prove to be a big move for Google (YouTube’s parent company), which no doubt hopes consumers will use Google TV (with updated Android 3.1 this summer) to stream rented movies. YouTube has been renting and offering movies for free with ads for more than a year, but the titles have been less than current.

According to the FAQ section of the company’s press release, YouTube has added approximately 3,000 new titles, “including catalog and new releases from Sony Pictures, Warner Bros, NBC Universal, Lionsgate Films and many great independent studios. This brings the total number of movie titles available to rent on YouTube to over 6,000.”

Viewers will have 30 days to begin watching a rental and, in most cases, will have up to 24 hours to complete viewing.

Engadget reports: “The pricing is $2.99/$3.99 for movies viewable via PC or Google TV (no other device support is mentioned) and the FAQ notes that YouTube supports resolutions up to 4K but ‘most’ of the new additions are sadly in SD, a choice which is apparently up to its partners.”

YouTube is betting that consumers are ready for a change in their viewing habits. Head of YouTube, Salar Kamangar writes on the company’s blog: “You’re finding more and more of the content you love on YouTube, which is now available on 350 million devices. We know this because you’re watching videos to the tune of 2 billion views a day. But you’re spending just 15 minutes a day on YouTube, and spending five hours a day watching TV. As the lines between online and offline continue to blur, we think that’s going to change.”

Related Engadget post (including YouTube press release and FAQ): “YouTube adds 3,000 movies for rental from Universal, Sony, Warner Bros.” (5/9/11)

Related article from TheWrap: “YouTube Finally Goes Hollywood With New Movies on Demand Service” (4/25/11)

Related article from TheWrap: “Mark Cuban: YouTube Can Change the World, But It Can’t Make Money Streaming” (4/14/11)

At this week’s Wired Business Conference in New York, Netflix co-founder and CEO Reed Hastings discussed his company’s growing success and its reliance on the evolution of bandwidth-related technologies. Netflix recently announced its first quarter earnings (up 88 percent with revenues at $719 million). The subscription-based rental service added 3.6 million new customers during the quarter, double the growth from one year ago.

Hastings indicated that streaming was always the goal of Netflix, but the technology was not ready when they launched the subscription service in 1999. Based on number of hours viewed, the Netflix streaming option surpassed its DVDs for the first time in Q4 2010. This is due to a larger selection of streaming content and improved bandwidth to subscribers.

Hastings has been waiting for this moment. “We took out our spreadsheets and we figured we’d get 14 megabits/second to the home by 2012, which turns out is about what we will get,” he explained. When asked about the next ten years he added, “If you drag it out to 2021, we will all have a gigabit to the home.”

Hastings was also careful to point out that he does not see Netflix streaming as a competitor to cable, which is why his service focuses on older movies as opposed to new releases, sports, or news (although Netflix is experimenting with original programming). “It would start an Armageddon battle, and we would not emerge alive from that battle. So we are concentrating on our niche,” he said.

Related Wall Street Journal article: “Netflix CEO Reed Hastings Swears He’s Not Going to Kill HBO: ‘We Compete Like Football and Baseball'” (5/6/11)

Related Engadget article: “DirecTV asks its customers what they like so much about Netflix, could launch competitor” (4/26/11)

Related ReadWriteWeb article: “Netflix Letter to Shareholders Shows It Couldn’t Care Less About DVDs” (4/25/11)

Related TechCrunch article: “Netflix Earnings Up 88 Percent, Adds 3.6 Million Subscribers” (4/25/11)

Related Home Media Magazine article: “Marvel Superheroes Stream on Netflix” (4/29/11)

Last week Microsoft announced its Xbox 360 will include subscription movie and TV service Hulu Plus, starting April 29. The subscription cost will be $7.99 per month (with limited advertising). Additionally, Xbox LIVE users will receive a one-week free trial sponsored by Jack Link’s Beef Jerky.

Hulu Plus will also add Kinect support, enabling users to control programs with their voice or via physical gestures. According to the Hulu blog: “With Kinect for Xbox 360, you can simply say ‘Xbox, pause’ or use gestures to rewind, pause and fast forward your way through your favorite shows.”

In related news, Gamasutra reports that a record number of Xbox 360 console sales contributed to Microsoft’s 13 percent year-on-year revenue increase for the first three months of 2011. A new quarterly record for the gaming console was set, as 2.7 million Xbox 360 units were sold (up from 1.5 million for the same period last year).

For complete details, visit the Hulu Plus on Xbox LIVE page.

Watch the video demo on Engadget: “Hulu Plus on Xbox 360 launches tomorrow, all members get a free week thanks to beef jerky” (4/28/11)

Related PC World article: “Making Sense of Streaming Media Options” (4/30/11)

Related Home Media Magazine article: “Six Questions with Microsoft’s Senior Spokesman, Jose Pinero” (4/29/11) Featuring everything from Netflix to ESPN, Microsoft wants Xbox to be the media hub in the living room. Jose Pinero, senior spokesman for Microsoft’s interactive entertainment business, chatted with Home Media Magazine about where live TV fits into the Xbox 360’s future, how the addition of Kinect might be a game-changer in the console wars and whether a Blu-ray Disc drive will ever be included in the Xbox.

Adobe previewed its new video streaming technology at NAB, built on the Adobe Flash Media Server. The new features and capabilities are designed to help stream protected video to mobile devices such as the Apple iPad and iPhone, Motorola Xoom, Samsung TVs and Atrix smartphone.

Last year Adobe introduced HTTP Dynamic Streaming (HDS) for the Flash Platform, which leverages the MPEG-4 fragment container format using H.264/AAC codecs. The company is now adding support for HTTP Live Streaming (HLS), an MPEG2 transport stream used by devices including the iPad 2. Adobe explains that HLS support within the Flash Media Server reduces “the publishing complexity for broadcasters who need to reach browsers supporting HLS through HTML5 (such as Safari) or devices where Adobe Flash is not installed.”

Adobe also demonstrated its next version of the Flash Media Live Encoder, that enables users to “capture a live broadcast stream and publish out to multiple devices including Android, Apple iOS and Samsung TVs.”

You can check out a seven-minute video demo on the Adobe blog.

According to the YouTube Blog, the popular video site has officially launched its beta version of YouTube Live — the possible next step in turning YouTube into a competitive TV streaming site. YouTube has live streamed concerts, sporting events and interviews in the past, but YouTube Live has the potential to be something much more significant that could grab the attention of broadcasters, advertisers and social media experts.

The blog announcement explains: “With over 2 billion views a day, it’s easy to think about YouTube as a place to watch videos recorded in the past. But you’ve told us you want more — and that includes events taking place right now…”

Although the announcement does not include the special celebrity channels touted in the press of late or any mainstream content yet, it does describe some basic information such as a browse page of live and upcoming events, interaction with users’ customized pages for channel subscription alerts, and YouTube’s plans for a “gradual rollout” of the live streaming beta platform.

The potential success of YouTube partners streaming live from their own channels may largely depend on the amount and type of content, as well as the social interaction between users and fellow streamers. However, it is clear that with the YouTube Live platform in place, Google is setting the stage for bigger ticket items, such as “broadcasting” professional content and global news and events.

Related Digital Trends article: “YouTube Live debuts as its overhaul continues” (4/8/11)

Related Wall Street Journal article: “YouTube Recasts for New Viewers” (4/7/11)

We recently reported that Time Warner Cable had drawn significant controversy over its free live-streaming app that provides subscribers access to streaming television content via their iPad (only in their homes). AP reports that Time Warner Cable has bowed to the subsequent pressure from Fox Cable Networks, Viacom and Discovery — and will drop 12 cable channels from the app (20 channels will remain and Time Warner Cable suggests it has plans to add more). The three programmers had complained that the app violated their programming contracts.

“For the time being, we have decided to focus our iPad efforts on those enlightened programmers who understand the benefit and importance of allowing our subscribers — and their viewers — to watch their programming on any screen in their homes,” explained Time Warner Cable in a statement.

Since the AP story hit the wires, Time Warner Cable and Viacom announced they are countersuing each other in U.S. District Court. This case may be an important indicator regarding the growing debate over content and licensing rights amidst an era of mobile devices.

Related Los Angeles Times article: “Time Warner Cable and Viacom sue over iPad app” (4/8/11)

Related Forbes article: “Viacom Yanks Channels From iPad App, Raises Stakes In Streaming Standoff” (4/8/11)

Related Broadcasting & Cable article: “TWC Clicks iPad App Channel Count up to 73” (4/25/11)

Netflix has taken another big step forward in offering premium content, following its announcement that it will have exclusive rights to stream 26 episodes of the original series “House of Cards” starting in late 2012. The Internet streaming service outbid cable channels such as HBO and AMC. “House of Cards” is a political drama based on the 1990 BBC miniseries of the same name. The new production will star Kevin Spacey; David Fincher is tapped to direct.

The deal is a big move for Netflix, which traditionally only airs previously produced and aired content. For the first time the company is licensing content before it is successfully produced. “Typically, we license TV shows the season after they run on a broadcast network or cable channel, and occasionally we have episodes from a current season, as is the case with ‘Saturday Night Live’ from NBC, ‘Spartacus’ from Starzplay and ‘Wizards of Waverly Place’ from Disney Channel,” Chief Content Officer Ted Sarandos wrote on the Netflix blog. “In all of these cases, the shows are produced before we bring them to Netflix. ‘House of Cards’ represents a slightly more risky approach.”

According to Ars Technica, Netflix currently delivers 61 percent of all digital video content to U.S. viewers. However, it should be noted that Amazon has tossed its hat into the ring with an instant video service that undercuts the Netflix streaming subscription by approximately $16 per year.

Related Wall Street Journal article (subscription required): “Web Shows Get Ambitious — Tech, Media Companies Race to Create Video Hits that Look, Feel More Like TV” (3/21/11)

Related Business Insider article: “Exclusive Interview with Netflix CEO Reed Hastings — Netflix’s Market Opportunity Is a Lot Bigger Than You Think” (4/4/11)

Related Ars Technica article: “Amazon Takes on Netflix with move streaming service for Prime” (3/11)

Apple is considering adding streaming video to its AirPlay service, which currently allows users to stream audio from an iPhone, iPad or iTunes to a home stereo or other devices. According to Bloomberg, two people familiar with the matter (who asked to remain anonymous) suggested the new feature would enable streaming video from an iPhone or iPad to television sets — and that Apple would license its software to CE manufacturers who could potentially use AirPlay in their devices for streaming movies, television and other video content.

Expanding AirPlay functionality could possibly spark more use of Apple devices and services in the home, despite the company’s limited success selling the $99 Apple TV set-top box thus far. Bloomberg reports that, “For Apple, AirPlay is a way to expand into the living room without having to introduce new products.”

While Apple and others such as Google are looking to explore the possibilities of streaming video and Web-connected televisions, a challenge for streaming content from a mobile device involves bandwidth issues and whether signals can be carried without interruption. Regardless of any technical obstacles, there is clearly a shift in how consumers are accessing TV shows and movies, with an increasing number of people accessing instant streaming services from the likes of Netflix and Hulu. Apple’s Steve Jobs — banking on a complete shift from physical media toward content distribution in digital form — has gone so far as barring Blu-ray players from Mac computers.

Time Warner Cable recently released a new iPad app that provides subscribers access to live-streaming television content via their iPad (Cablevision is expected to release a similar app shortly). And not surprisingly, the TV networks have expressed concern. Channel owners including Viacom and Scripps see the streaming capability as a contract violation, and reports indicate that cease and desist orders are underway.

To stream programs from Time Warner, customers download the iPad app, log in to their account, and choose from a selection of channels. The current version of the app only works inside the home for customers who receive both TV and Internet from the operator. The problem with this approach is that the networks view iPad streaming as a separate service from cable television, one that may require a different fee.

While Verizon and Comcast are also working on streaming apps for iPads, clearly the business model has yet to be ironed out. And we still don’t know if consumers will be watching TV through an app from their cable company, an individual channel’s app, or through a service such as Netflix.

Related New York Times story: “Dispute Over Time Warner Cable’s Streaming to iPad Bursts into the Open” (3/28/11)

Related Engadget story: “TWCable TV app for iPad now available, but Dish has something to say about being ‘first with live streaming'” (3/15/11)

As alternatives to traditional cable TV services continue to be introduced, the discourse grows regarding whether or not consumers are ready to “cut the cord.” Recent data from ESPN and research firm SNL Kagan suggests that any cable subscriber losses are being offset by gains elsewhere. However, as a percentage, fewer households are subscribing to cable than in the previous year. And financial services firm Stifel Nicolaus recently reported that pay TV might not be making a comeback over the longer term. The research report indicates year-over-year subscriber growth was at a mere 0.3 percent during 2010 — “the lowest year-over-year growth on record.”

According to Stifel Nicolaus analyst Christopher King: “Cable operators have been quick to point to housing and the anniversary of the nationwide digital transition in 2009 as reasons for recent subscriber declines; however, our analysis suggests that growth in the pay TV market has underperformed household formation in recent quarters and the impact of the 2009 digital transition should no longer be an issue.”

The pay TV market is over-saturated (at more than 84 percent of households), and while many continue to blame the state of the economy and the saturation on the declining numbers, it is interesting to note that Netflix added 6.4 million subscribers during 2010. As the cost of pay TV subscriptions continue to rise, consumers are beginning to “further re-evaluate the value they place on traditional pay TV services which bodes well for the likes of Netflix, Amazon and Apple TV among others,” King wrote in the report.

Editor’s Note: For those interested, the GigaOM post “Cord Cutting Threat Ain’t Over Yet” features some very interesting charts including Pay TV Subscriber Growth 3Q09-4Q10, Pay TV Penetration 4Q06-4Q10, and Netflix Subscriber Growth 2010 (as compared to Pay TV).

Billed as “the world’s first camera-top wireless HD video encoder,” the Cube from Irvine, CA-based Teradek streams up to 1080p over Wi-Fi, Verizon 4G, and wired Ethernet.

The battery-powered H264 encoder sends video directly from a camera to a decoding device such as a laptop or iPad. The Cube is available in HD-SDI and HDMI models running in the $1500-2000 range, and is designed for those in the business of live streaming — or those looking for production solutions such as on-set video monitoring or eliminating the need for camera tethering.

To operate, the Cube slides into the camera’s hot shoe and goes live with a single button via Livestream.com. Gizmodo reports the process is “unhampered by firewalls, blocked ports, and other network roadblocks.”

Early adopters earn a month of Livestream.com premium membership (about a $350 value) with a Cube purchase.

Internet TV pioneer Hulu is reportedly in discussions to transform its business model. Since its 2008 launch, Hulu has been one of the leaders in free online television delivery and web-video ad dollars.

The Wall Street Journal reports that Hulu’s three owners (NBC Universal, News Corp. and Disney) are concerned that free Web versions of their TV shows are cutting into their traditional business, and the three are at odds regarding how much of their content should be offered for free.

News Corp.’s Fox Broadcasting and Disney’s ABC are considering pulling some of their free content from Hulu (and selling more content to Hulu competitors), while Hulu management is discussing the idea of retooling Hulu as an online cable operator that would use the Web to provide live TV channels and video-on-demand content to customers. If they opt to move forward with such a plan, some form of Hulu’s free service would likely remain and it is possible Hulu Plus could be folded into the new service.