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Netflix is Re-encoding Its Entire Catalog, Adjusting Quality and Using Less Data

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Thanks to an in-depth report from Variety , news broke that video streaming giant Netflix Inc NFLX is revamping the way it provides its users with movies and television shows over the Internet. Not only will there be a new encoding process that adjusts the quality level based on what content you are watching, but the company's streams will also use up to 20% less data.

Despite a decrease in data usage, Netflix has confidence in the fact that no user will notice lesser picture quality in the content they stream. In fact, content may actually look better than it does now. The company's new encoding process will differentiate between, say, an animated movie and a feature film; there will be less bandwidth used to stream animated series while more bandwidth used to stream movies like The Avengers . In the words of The Verge , "Netflix realized streaming animated shows and Hollywood blockbusters at the same quality is stupid."

It's important to note that animated content will still be in 1080p, but Netflix is pulling back on the amount of bitrate used to somewhere around 1.5Mbps.

This move provides Netflix a few strategic benefits. Since the company accounts for more than one-third of all Internet used during peak hours, it is paying Internet service providers like Comcast CMCSA and Time Warner Cable TWX a fee to bring its streaming data to customers. Re-encoding its catalog could potentially save Netflix a lot of money, as the fee amount would likely decrease. Mobile streaming from Netflix users could increase since data usage and fees would be less of an issue; increased streaming content in developing markets, where high-speed Internet is a rarity, could be a re-encoding side effect too.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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