By Jeff Reeves of
NEW YORK ( TheStreet) -- Netflix (NFLX - Get Report) has seen rapid growth recently, with shares up +215% in the last 12 months compared with about +15% for the Dow Jones, and a stunning +550% in the last five years vs. just +10% for the Dow.
Part of that success has hinged on the company's seemingly seamless transition from dominant home delivery of DVD rentals to more streaming content and partnerships to provide online movies through various gadgets -- from wired BluRay players and HDTV's to video game consoles.
But what would have happened to Netflix if, five years ago, the U.S. postal service was overwhelmed by DVD mailings and movies didn't reach your house via the mail until weeks after you ordered them -- if they arrived at all? NFLX stock not only would have missed out on all its growth, it may have gone out of business entirely.That is exactly what Netflix now faces in digital form -- since broadband capacity is now stretched to the limit thanks to the popularity of streaming video. The data demand caused by Netflix could soon become enough to crash the Internet altogether. NFLX certainly isn't the only offender in this streaming video glut, but it is one of the biggest with over 15 million subscribers and most of them watching video for a few hours and not just a few minutes like those seeking cute pet clips on YouTube. What's more, its recent expansion of Netflix streaming video service in Canada could add even more rapid growth to its user base. And here we arrive at the problem: According to
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