Analyst: Netflix the 15th Most-watched TV Network

4 Jan, 2012 By: Erik Gruenwedel

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Upwardly revised data by Netflix suggests its users are supplanting TV-network viewing with streaming

Netflix’s disclosure that its subscribers streamed more than 2 billion hours of content in the fourth quarter means the rental service now is the 15th most-watched TV network in the country, an analyst said.

The Los Gatos, Calif.-based rental service’s revised data doubled previous estimates by CEO Reed Hastings, prompting some analysts to suggest that Netflix’s streaming prowess largely is underestimated by traditional media executives.

BTIG Research analyst Richard Greenfield based the claim on the fact that among 100 million U.S. households receiving multichannel video, the service’s 21 million streaming subs watch 64 minutes a day of content — up from 33 minutes estimated last month. That equates to 32 hours of streaming per sub per month.

Greenfield last month said he believed Netflix to be the 25th most-popular TV network, which put the service ahead of networks such as FX, HGTV, The History Channel, MTV, TLC, ESPN2 and CNBC, among others. It had twice the viewing hours of CNN, BET, The Discovery Channel and MSNBC.

Among Netflix households, which tend to watch more than the average TV household, the streaming service ranks the No. 2 most-watched “network,” behind CBS, and potentially ahead of Fox, NBC and ABC, according to the analyst.

“We believe the size of the gap between Netflix and Disney would ensure it was far more watched than any cable network, albeit, it might not surpass ABC, NBC and FOX; the most conservative interpretation would place it No. 5,” Greenfield wrote.

At an investor event in December, Time Warner CEO Jeffrey Bewkes — a long-time critic of subscription video-on-demand and Netflix in particular — said Netflix was the 50th most-popular TV network, based on about 200 million hours streamed per month. That figure actually is less than a third of the 666 million hours per month Netflix said its subs stream.

More importantly the streaming is not in addition to the average TV household’s daily viewership of more than eight hours of live TV plus DVR/VOD content — it is in partial replacement of those hours.

“With Netflix viewing at these levels, it simply cannot be all incremental,” Greenfield wrote in a Jan. 4 post. “Pretty amazing, given that Netflix is only in 21 million homes (with its streaming service just four years old) compared to the near-complete distribution across multichannel homes of the top cable networks.”

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