Customer Question: Your company has been blaming Disney+ for the network troubles in November. How are these related?

Why would Disney+ make a difference to bandwidth demand?

Many customers have asked this good question. Just because people are now streaming Disney content instead of Netflix content , why would that increase demand? It’s not like we are watching more- we are just streaming from a new site. 

The answer to this question is that the Disney+ launch has made a HUGE difference to demand for this simple reason: Netflix was all local content in Eagle Mountain, whereas Disney is coming from the cloud outside of Utah. 

Please understand that as a marketer and a parent, I am extremely excited about the new opportunity our customers have to access Disney+ content at a great price. (My kids love it too.) We always want our customers to stream more, because that’s where our competitive advantage is at as a fiber network. However, there are some serious growing pains going on right now to match new demand, because this product launch was not gradual, like the slow growth of Netflix as a phenomenon was.

Many years ago, Directcom qualified as a certified Netflix partner, and we worked with Netflix to place a Netflix server inside our local fiber network. See http://directcom.com/eaglemtn/netflix-partners-directcom-deliver-ultra-hd-eagle-mountain/

Every night at around 3am, the Netflix box would download updated content, and we would serve that content  to Eagle Mountian customers locally. Nearly half of all bandwidth usage in Eagle Mountain was Netflix at one stage, but it was all on the local network  here in Eagle Mountain, which meant we had plenty of free space for the traffic going out of Eagle Mountian during peak demand times. 

Enter Disney+. 

If Disney CEO, Robert Iger, were to visit Eagle Mountain, I could picture him standing at the top of Hidden Hollow, with his hands outstretched, and saying (after one of those extended maniacal villain laughs) “YES! These are my people. This is why I launched Disney Plus!”

Eagle Mountain probably has the youngest demographic of any city in the USA. There are a lot of kids in Eagle Mountain. There is an average of nearly five people in every household. Residents are mostly young, well educated, budget conscious, extremely tech savvy, and most have been streaming exclusively for several years. There is no cable TV, and nobody in Eagle Mountain has paid for satellite since about 2011. And the traditional family-friendly culture and desire for clean, kid-friendly entertainment makes it the dream market segment for Disney+. I would guess there’s likely a higher penetration for Disney+ here than anywhere else in the nation.

Note that Disney+ has no local presence or content on the network in Eagle Mountain. Now, replace all the local  Netflix traffic overnight with new Disney+, which is coming from out of state. Everyone suddenly wants to watch the new Disney content, plus the old stuff Disney pulled from Netflix, and there is an instant traffic jam at peak times. This would be similar to a situation where every car in Eagle Mountain suddenly tried to get onto Pioneer Crossing to get to Salt Lake City at the exact same time each night. But, remember, there are a lot more streamers than cars in Eagle Mountain.

Hopefully in time Disney has a plan to place their content in more remote locations, and work with small providers like us, but until then we have no choice but simply to increase our bandwidth purchase to satisfy our customer needs. And that is what we will do.

Of course I favor the perspective of rural networks, but I can’t help but ask myself the question: why should the burden of distributing the huge entertainment companies’ content fall solely on the back of small network builders like us? If we have to double our bandwidth costs so that Disney can make a profit margin on their low-cost new service, wouldn’t it be fair to expect Disney to have to help pay to access these remote distribution networks? That is the way rural telecom worked in the old days, and I understand these are the new days, but I don’t know if this current model is sustainable forever, where small ISPs are subsidizing the distribution costs of these huge multinational corporations. 

The good news is the bandwidth situation is a short-term problem. Things will settle down soon. Already we are seeing a decline in Disney+ traffic since the launch a couple of weeks ago. (Bandwidth looked pretty good last night in fact.) The novelty will wear off, people will finish watching the Mandalorian, have watched all those old beloved childhood movies suddenly all out of “the vault,” (Cat from Outer Space anyone?) and life will continue. By that time, we will have all the new bandwidth in place and be ready for the next big event in the streaming wars, when the next big studio launches a new service.

Update 11/23

Our network engineers were able to integrate the new bandwidth vendor/carrier and redundant bandwidth circuit into the network distribution the day after this initial post was made. There were already multiple routes out of Eagle Mountain using various upstream providers, and now we have added another. Traffic is looking good again. We continue to always monitor the bandwidth situation and to always try to keep up with growth to make sure we are never oversubscribed. We will continue to make upgrades and keep purchasing more bandwidth as the need arises. Customer experience is our priority.