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NPD: On Qwikster Anniversary, Consumers Return to Netflix Watching Fewer Movies

17 Sep, 2012 By: Erik Gruenwedel

A year after the launch of Qwikster — Netflix’s ill-fated attempt to spin off its disc rental business — the subscription video-on-demand pioneer has seen subs return who are primarily watching TV programming, according to new data from The NPD Group.

The Port Washington, N.Y.-based research firm said 25% of domestic households now use the service while watching fewer movie disc rentals. Indeed, just 27% of Netflix subscribers rent discs compared with 35% a year ago. Fueling the share decline is a 30% decline in the number of disc renters in the U.S., and a 40% decline in the number of discs rented, according to NPD. Redbox now is the market leader in physical rentals.

NPD based the data on a consumer survey of people watching movies on demand — such as transactional VOD — and does not include subscription video-on-demand users or disc renters.

“Today marks the first anniversary of Netflix introducing Qwikster, its by-mail DVD and Blu-ray service, which was meant to formally separate Netflix’ streaming Watch Instantly service from its physical disc rental service,” said Russ Crupnick, SVP of industry analysis for The NPD Group. “Qwikster came in the wake of several price increases and changes to the service offering that were met with general skepticism from subscribers.”

While 12% of Netflix subs just rent physical discs and 30% opt for both discs and streaming, 58% of Netflix subs only stream content.

NPD estimates that 80% of streams that occurred between January and August of this year were television shows. According to the survey, 36% of Netflix subscribers view only movies, while 53% view both TV and movie content. Over time, NPD expects the number of “movie-only” subscribers to decline, as Netflix uses its original TV programming to attract and retain new subscribers.

Indeed, while 70% of respondents rate Netflix highly, many were critical of the dearth of quality streaming content or “having videos I like,” “current releases” and ”easy to find something new to watch.”

“As Netflix shifts to being more TV-centric, they will attract subscribers with a different set of expectations,” Crupnick said.

Netflix is, in fact, working to enhance its availability of original programming and exclusive content. The Los Gatos, Calif.-based service is in production of several TV series and signed exclusive movie SVOD deals with DreamWorks Animation and Relativity Media, among others.

“A minority [of respondents] are satisfied with the current collection, and the declining ease of finding things subscribers want to watch, are areas Netflix must address in order to continue domestic streaming growth, especially in the face of improving pay-TV VOD offerings, looming Redbox-Verizon service and competitive over-the-top options from Amazon and others,” Crupnick said.

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