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Analyst: Netflix Subs Streaming 33 Minutes of Content Per Day

23 Dec, 2011 By: Erik Gruenwedel

Netflix CEO gets 50% cut in stock options following tumultuous 2011

Netflix streaming subscribers are watching about 33 minutes of content a day — more than twice the amount watched in a month a year ago, according to an analyst.

BTIG Research analyst Richard Greenfield dissected Netflix CEO Reed Hasting’s comment earlier this month that Netflix would stream more than 1 billion hours of content in the current fourth quarter, which ends Dec. 31. Netflix is expected to have 22 million streaming-only subs in Q4.

While the time spent streaming content from the Internet appears impressive, Greenfield said the usage rate accounts for just 1.2% of overall TV viewing among American households.

“While Netflix may be very popular in Netflix homes, it is rather meaningless when put into the context of total television viewing,” Greenfield wrote in a Dec. 22  post.

Digging deeper, the analyst found that Netflix viewership would rank it the 25th most watched TV network among all channels reaching 100 million cable homes — ahead of MTV, TLC, CNN, ESPN2, and CNBC, among others. Netflix is currently in 22% of all multichannel domestic cable households. Among Netflix households, the streaming giant ranks the 6th largest network — ahead of Univision but trailing CBS, ABC, NBC, Fox and Disney Channel.

Greenfield cautioned that the viewership analysis could be skewed by the fact Netflix users are incentivized to use the service since they are paying for it “a la carte” on a monthly basis compared to other channels bundled in the typical multi-channel subscription plan.

“We suspect if you had to pay discreetly for certain channels, the viewership level of a network like Disney Channel or ESPN in those homes willing to pay for those channels would be even higher than it is today,” he wrote.

Separately, Netflix is cutting CEO Reed Hastings’ stock-option allowance in half, while slashing chief marketing officer Leslie Kilgore’s base salary nearly 30%, according to a Dec. 22 regulatory filing.

Hastings, who co-founded Netflix, will continue to receive a $500,000 base salary in 2012, in addition to annual stock-option allowance of $1.5 million — down from $3 million in 2011. His monthly stock allowance was cut in half to $125,000 from $250,000.

Kilgore will be paid base salary of $575,000, compared with salary of $802,000 in 2010. She saw her annual stock allowance increase more than 20% to $1.35 million, compared with $1.09 million this year. Her monthly stock allowance increased same percentage to $110,417, compared with $91,500 this year.

Los Gatos, Calif.-based Netflix did not give an explanation for the reductions. However, there would appear to be less mystery who is shouldering the blame after the subscription video-on-demand’s stock valuation plummeted 75% at year’s end from an all-time high in July following a series of PR blunders and a poorly received price hike that resulted in more than 1 million net subscribers dropping the service.

Meanwhile, other senior executives received raises, including CFO David Wells, whose base salary increased $90,000 to $490,000; and chief content officer Ted Sarandos, who saw his base salary jump more than 10% to $1 million from $903,000. Interestingly, Sarandos and chief product officer Neil Hunt now earn twice the base salary of Hastings.

Wells, Sarandos and Hunt also received increased annual stock-option allowances of 45% ($160,000), 66% ($600,000) and 29% ($403,000), respectively. All senior executives again received an additional $10,000 in annual compensation to be used to defray the cost of health benefits previously paid by them, if any.

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