Monday, September 10, 2012, 10:33 AM ET|Posted by Will Richmond
Research firm GfK released data from its third annual Over-the-Top TV report late last week, finding, among other things, that consumption by Netflix subscribers age 13-54 is roughly 2,000 minutes per month, about the same as it found in its '11 study. That amount is in the same general ballpark as the 2,388 minutes/sub/mo that BTIG analyst Rich Greenfield calculated for June, 2012, and in line with the 2,000 minutes/sub/mo that I calculated during Q4 '11.
The survey of 1,051 persons age 13-54 and conducted in June, 2012, found the average Netflix subscriber watches 5.1 TV shows and 3.4 movies per week. The survey revealed that 39% of this age group are Netflix subscribers (up from 35% in '11), with 47% having ever been a Netflix subscriber.
Relatively steady usage isn't exactly the basis for bragging rights, but given all the headwinds Netflix is facing, it isn't shabby either. In particular, Netflix has faced increasing content parity from Amazon Prime Instant Videos, which at some level, has to impact viewership for users with subscriptions to both (e.g. "Honey, we can watch 'Parks and Recreation' on either Netflix or Amazon, what do you prefer?") if not driving outright Netflix churn at some point. While Amazon may be competing to offer the same content, there are of course other providers with content different from Netflix (e.g. network TV, cable TV, Hulu, YouTube, Vudu, HBO GO, etc.). Everyone is jockeying for audience attention.
Then there are Netflix's own mea culpas that have surely affected its usage, starting with last summer's pricing/Qwikster debacle. GfK found that 37% of Netflix subscribers still have a lower opinion of the company a full year after the moves, and that 48% of pay-TV homes would "definitely" or "probably" drop Netflix if their pay-TV provider offered a similar service at a similar price.
Netflix's CEO Reed Hastings has said repeatedly that he views these pay-TV providers' TV Everywhere services as the biggest long-term threat to the company. On this front though, the good news for Netflix is that TV Everywhere has barely broken through to the public; GfK found that just 17% of survey respondents were even aware their pay-TV provider offers TV Everywhere (in line with recent Parks Associates' research), and of this, just a fifth of these people have actually used it. Troubling for pay-TV operators is that these are essentially the same awareness and use levels GfK found 7 months ago in a survey fielded in Nov. '11.
Last but not least, GfK found once again that DVDs remain hugely popular, with 86% of respondents reporting they have a DVD player in their house, and 55% watching a DVD at least once per month (both levels down slightly from the prior year). In addition, Blu-ray penetration has surged to 27% of homes (from 12% in '10), with 16% having Internet connectivity (up from 6% in '10). Netflix is missing out on the continued resilience of DVDs, as it all but abandoned its DVD business last Fall, resulting in a loss of at least 7.4 million DVD subscribers over the last 5 quarters.
Given everything going on, Netflix's steady viewership looks like a positive for the company. It could definitely have been stronger, but the GfK certainly validates the fact that for now at least, Netflix remains the strongest OTT brand around. However, with Amazon coming on strong, plenty of share-shifting is no doubt ahead.
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