Netflix and offline viewing
According to a report on Hollywood.com, citing chief operating officer Daniel Taitz of Penthera, a video caching service, Netflix (NFLX) could offer an offline viewing option by the end of this year. Netflix’s chief executive officer Reed Hastings said earlier that Netflix was open to the idea of offline viewing.
Other streaming services that offer offline viewing include Alphabet’s (GOOG) YouTube and Amazon’s (AMZN) Prime Instant Video service. YouTube offers offline viewing in developing markets such as India (EPI).
Netflix has been exploring a variety of ways to make video streaming easier for users. It intends to spend more than $800 million on technological and development initiatives in 2016. In March 2016, according to a Wall Street Journal report, Netflix stated that it’s capping its video streaming at 600 Kbps (kilobits per second) to “protect consumers from exceeding mobile data caps.” The company admitted to streaming low-quality videos for subscribers on AT&T’s (T) and Verizon Communications’ (VZ) wireless networks.
Why could Netflix be pursuing offline viewing?
Supporting its reasoning behind low-quality video streaming, Netflix explained in its fiscal 1Q16 earnings call that mobile has expensive data usage charges ranging from $10–$20 per gigabyte. So the company wants to save data for its users “by using very tight and small encodes, especially when it’s being watched on a 4-inch or 5-inch screen.”
Netflix also stated that it intends to allow its users to choose between extreme, moderate, or no data saving. Data caps could also be the reason behind Netflix possibly offering offline viewing.
Netflix is focusing on video streaming on mobile because video is quickly becoming an important part of mobile data traffic. According to Cisco’s (CSCO) VNI (Visual Networking Index), video made up ~61% of the mobile data traffic in the United States at the end of 2015. This figure is anticipated to increase to ~77% at the end of 2020.
Netflix makes up 0.72% of the PowerShares QQQ ETF (QQQ). QQQ has an exposure of 5% to the television and radio sector.