At the IP&TV World Forum in London this week, Bill Holmes, VP of Business Development for Netflix, gave a keynote at the beginning of the third day. He revealed some fascinating data about how the streaming service is doing, much of which confirms TDG's consumer research and, once swallowed, can lead one to some shocking conclusions.
First, according to Holmes, Netflix is now streaming 20 million hours of content per day, meaning that among the ~13 million Netflix streamers (65% of its 20 million subscribers per TDG estimates), each is watching an average of 1.5 hours of Netflix content a day. Keep in mind that, according to Nielsen, the average TV viewer watches a little over four hours of TV daily.
Then again, Holmes said that the average Netflix streamer watches 27 hours of online content each month, notably less than the 1.5 hours a day noted first. This second figure is perfectly in line with TDG's most recent survey findings - 5.5 hours per week - so I'm inclined to believe the lower figure. However, regardless of the exact number of hours per day - be it 1.5 hours or half that - the data seems to suggest that Netflix is far and away the most popular "channel" in Netflix subscriber homes, more so than cable and broadcast's best, whether ESPN, USA, or ABC.
But now the presentation gets really funny, as Mr. Holmes repeated the company mantra that Netflix does "not want to own the subscribers' entire wallet," meaning the company views itself as an augmentation to traditional home video services, not as a replacement. A politically prudent statement, as Netflix is trying its best to appear non-threatening to incumbent operators and content networks.
However, now that many of your subscribers spend at least 25% of their TV day (assuming one hour per day of Netflix streaming for the typical four-hour per day 'average' Nielsen TV viewer), how can anyone take this claim seriously? Simply by viewing Netflix content instead of PayTV programming, the value of the PayTV subscription is without doubt diminished, if only because the PayTV subscriber is not using the service as much as they were pre-Netflix streaming.
Another statistic that stood out was Mr. Holme's claim that 90% of subscribers are so pleased with the quality of Netflix service that they would recommend the service to a friend. This might at first seem an outrageous claim, but our research corroborates this number. In fact, TDG survey data from February 2011 found that 91% of streaming subscribers are satisfied with the service.
He also went on to say that 70% of new subscribers heard about the service by word of mouth. This might explain why subscriber acquisition costs are so low at the company - reportedly a little over $11. PayTV providers would kill for a SAC of $11!
As to when TDG's new Netflix analysis will be available, Members can expect to receive it in late April. In the meantime, check out Mr. Holme's full IP&TV presentation here.
ShareThis