Are One in Five Netflix Subscribers Watching Online?
by Peter Kafka
Posted on January 27, 2009 at 11:59 AM PT
Netflix executives spent a lot of time yesterday playing up the success of their online streaming video offering: They said the appeal of the program, which offers free on-demand movies and television to most of their customers, helped them wrangle more subscribers than anticipated and let them beat Wall Street’s already heightened expectations.
I can attest that the streaming service is indeed excellent–enough so that I’m likely to drop my subscription to Time Warner’s (TWX) HBO very soon. What I can’t tell you is the number of Netflix subscribers who are actually using the service, because Netflix (NFLX) isn’t offering up any real data about the program–only that “millions” used the service in the last quarter.*
But! That data point alone is enough to suggest that more than 20 percent of the company’s subscribers are using the service.
Here’s the algebra, courtesy of Barclays Capital’s Doug Anmuth: Netflix ended the quarter with 9.4 million subscribers. If “millions” means at least two million, than that means at least 21 percent of the company’s customers use streaming–while continuing to use DVD and Blu-ray discs.
That strikes me as a fairly astonishing number, given that it’s still not a simple process to get Netflix’s stuff on your TV, where you can best appreciate it. There’s now a handful of devices, like Roku’s specialized box and Microsoft’s (MSFT) Xbox 360, designed to get the company’s movies and shows on your big(ish) screen, and more on the way, like LG’s TVs that come prewired for the service.
But most of this stuff is getting viewed on viewer’s laptops, Netflix says. Just think of what the adoption rate will be like when that switches to TVs.
*A reader suggests that Netflix may not mean millions of viewers, but millions of views, or some other obfuscation. I thought about that one, too, and double-checked Hasting’s remarks, via Seeking Alpha. Here’s the relevant excerpt: “Our existing subscribers are watching instantly in ever greater numbers and in just the last month millions of our subscribers got more value from their Netflix subscription by streaming.”
Bear in mind that these are his scripted remarks, pre Q&A. So it seems to me he was being very deliberate here — he’s got a lot of folks using his Web service, and he wants to brag about it.
[Image Credit: jeffgunn]
Comments
Peter – do you think they’re pulling a fudgesicle by conflating millions of users with millions of *uses*?
It’s kind of like the whole YouTube viewing hooey — 10m views means absolutely nothing about number of unique viewers, but it’s often trumpeted as proof of broad viewership…
Posted by David Sarno at January 27th, 2009 at 1:33 pmThe niftiest way to get streaming Netflix movies is via Tivo.
Tivo also lets you download still jpg photos from your computer for viewing on your great big flat panel screen, and to listen to music from your computer on your serious sound system.
SF
Posted by Stan Froud at January 27th, 2009 at 1:42 pmI thought about too, David. But here’s Reed Hasting’s prepared remarks, via Seeking Alpha. He’s quite specific:
Posted by Peter Kafka at January 27th, 2009 at 1:51 pm“in just the last month millions of our subscribers got more value from their Netflix subscription by streaming.” I don’t see how you see that as anything less than 2M subs. Only caveat would be if he assumes that each sub has multiple people watching, but that seems like a real stretch.
Yes Peter that seems pretty specific. Don’t forget TiVo too. I just set mine up to stream Netflix the other day and was surprised how easy it was to get it working.
The portion of their catalog that is stream-ready is still quite small and missing most of the best titles (imo). But I can really see it catching on once they bulk up the library.
Posted by David Sarno at January 27th, 2009 at 1:57 pmIt’s really easy to hook your laptop to your HDTV. On my Mac Book, I just bought a MiniDVI to HDMI cable and connected the two (I also had to run a cable from my head phone jack to my receiver). The quality isn’t HDTV, but it is close. We’ve dropped our cable back to just basic local channels. We use Netflix for movies and Hulu.com, Joost.com, tv.com, etc… for even more content.
Posted by Lindsay Broughton at January 27th, 2009 at 2:06 pm