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Netflix and chills – the state of streaming amid pandemic

Lars Larsson, CEO of Varnish Software, explores the potential impacts of the health pandemic on streaming companies

On 11th March 2020, the World Health Organisation declared the outbreak of COVID-19 a global pandemic. At the time of writing, 125 countries and territories had been affected by the flu-like illness, leading many countries’ governments to announce drastic social distancing and self-isolation measures to slow down the spread of the disease. School closures, border restrictions, travel bans and city-wide lockdowns have been announced to firmly encourage citizens to stay indoors and avoid large public gatherings, in which the virus can gather momentum. 

Knee-jerk uptick in streaming stocks

With the coronavirus outbreak causing a growing number of people to work from home and self-isolate, “stay at home” stocks are outperforming the market. Earlier this month, it was reported that while travel and leisure companies were among those hit the hardest during the virus outbreak, shares of Netflix saw a slight increase in value, as did Facebook, exercise equipment maker Peloton and some food delivery services.

Investors are clearly expecting the use of these services to rise as individuals taking precautions against the virus look for ways to entertain themselves indoors. But will streaming companies actually stand to gain from more people using their services? Or is there actually more at stake?

While some analysts argue that more people at home means an uptick in subscriber numbers for streaming platforms, other analysts have countered this argument, suggesting streaming companies will in fact lose international subscribers and won’t necessarily generate higher revenues. As Needham analyst Laura Martin suggested, more hours viewed by existing subscribers doesn’t equate to a bigger share of wallet, given users are billed per month rather than by usage or consumption patterns. 

Irrespective of whether or not streaming companies stand to make more money from social distancing and ‘stay at home’ policies, let’s not forget the potential technological repercussions of more sustained activity from consumers on these platforms. And it’s these repercussions that could make or break one service over another in uncertain times. 

Quality over quantity

While streaming service CFOs may be pleased with recent investor confidence, CIOs will be more concerned with how the customer experience holds up, as an increasing number of viewers try to access content. With citizens stuck at home with a limited number of activities to keep them busy or distracted, the temptation to reach for the remote and binge watch the latest series of Narcos might be the only thing to keep cabin fever at bay. 

And with a variety of new streaming services set to launch between now and May – including NBCUniversal’s Peacock, WarnerMedia’s HBO Max and Quibi – there’ll undoubtedly be a lot of pressure on networks to serve up the latest original content without issue. Any instances of delays or buffering from new or our most beloved streaming services will be an immediate turn-off, with viewers demanding the same level of reliability no matter how many users are streaming at once. 

A remedy for experience issues 

Peaks in activity for any streaming service – whether that’s gaming, audio or video – are rarely 100 per cent predictable. At the end of 2019, Amazon became all too familiar with the challenges that unprecedented viewer numbers can create. The tech giant’s Prime service struggled to stream Premier League football fixtures without the platform stuttering, freezing or crashing. 

Nevertheless, it pays off in the longer term to try to anticipate and mitigate potential peaks in activity before they happen. Delivering on-demand streaming at scale, to unpredictable audiences on multiple devices, poses significant technical challenges. With roughly three-quarters of streamers not returning to services that have faced multiple buffering issues, engineering teams need to work to alleviate delivery challenges, leveraging the power of caching technology to reduce the bottleneck on servers and ensure their users see minimal start-up times, faster downloads, and better experiences. 

While nobody could anticipate increased demand due to coronavirus, streaming services should be architecting their content delivery networks to cope with peaks in demand – wherever they arise. VoIP video gaming app Discord has recently announced that it will up the amount of people who can simultaneously view a live stream from 10 people to 50 people, in response to the pandemic and in a bid to keep users in virtual contact with one another during social distancing measures. 

Other streaming platforms will need to follow suit, and ensure they have the right technological infrastructure – including caching – in place to handle the delivery of content quickly, on-demand and at scale. Caching policies allow streaming platforms to offload traffic that would otherwise hit the backend, reducing latency and minimising instances of buffering or lag. Caching also enables the storage of massive content libraries so that even if thousands of self-isolating citizens are reaching into the deepest troves of your video back catalogue, you can deliver reliably, even when demand is high. 

Streaming fever

We’re living in strained times, and the uncertainty of COVID-19 has created a new reality for businesses and citizens alike. The best we can do is adapt to the situation. With governments directing citizens to stay at home to prevent the further spread of the virus, our new normal will likely be spending time indoors, enjoying the benefits technology can provide in connecting people and places. It’s a unique, if not sombre opportunity for those companies providing network infrastructure, platforms and services to get the technology right, while they have a captive audience.