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Netflix ‘causes industry pain, not death’

Solo_TV_InHome001 NetflixThe notion that Netflix is killing traditional linear television is incorrect, though the streaming service is clearly eating into networks’ ratings, according to a research note.

MoffettNathanson analyst Michael Nathanson said the “powerful and widely communicated narrative” around Netflix’s impact on TV was often “made with an absence of facts”.

Netflix use was not necessarily leading directly to ‘cord cutting’ – scrapping cable subscriptions in favour of SVOD platforms – as analysing Nielsen ratings data could not give “quick and easy” comparable statistics between SVOD streams and traditional TV viewing figures.

“Based on our analysis of Nielsen data, Netflix’s domestic streamed hours would equate to about 6% of traditional TV hours [viewing + time-shifting] vs. over 4% in 2014,” Nathanson noted. This equated to around 29 billion hours of video.

“At present, Netflix would be larger than the smallest cable network companies, but smaller than the seven largest cable and broadcast conglomerates,” said Nathanson. “Currently, Netflix is a source of industry pain, but not necessarily a cause of industry death.”

However, Netflix was found to be responsible for almost half of viewing that was diverted from traditional TV.

Broadcast networks took the biggest hit, with CBS viewing among Netflix subscribers 42% lower than those without it. Fox took a hit of 35%, ABC 32% and NBC 27%. Cable networks were in general less affected.

Netflix, which currently has around 45 million US subs and 75 million worldwide, was predicted to be taking 14% of total TV viewing by 2020.

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