• by Jack Loechner , Staff Writer @mp_research, October 6, 2014

According to new research from The Diffusion Group (TDG), Netflix streaming has increased 350% during the last 10 quarters, growing from two billion hours in Q4-11 to seven billion hours as of Q2-14. TDG’s latest analysis of Netflix examines subscriber growth and hours streamed, and offers domestic forecasts for both through 2022. The report also discusses Netflix’s new frontier, international service introductions.

Although the rate of international streaming growth has outpaced that of domestic streaming, US consumption remains responsible for the majority of total worldwide streaming hours. In Q3-11, domestic Netflix subscribers represented 94% of the worldwide total. In Q2-14 the US share of total worldwide subscribers declined to 72%, a trend expected to continue as Netflix executes its international expansion strategy.

US Netflix subscribers’ total streaming hours have almost tripled from 1.8 billion in Q4 2011 to 5.1 billion in Q2 2014, reports TDG, summarized by Marketing Charts, and per-subscriber streaming internationally has increased from 28.3 to an estimated 46.6 hours per month. But while the typical Netflix user might be streaming for one-and-a-half hours per day, American users surveyed by GfK say their consumption of regular TV is unaffected. 

Bill Niemeyer, TDG Senior Adviser and author of the new report, says “…when Netflix first launched in 1998… it would have been difficult to imagine that… it would pass HBO to become the largest premium TV/movie subscription in the US… (and become a) formidable international streaming business…”

According to the Debrief from MarketingCharts, traditional TV consumption has been declining among younger age groups (the most apt to be using OTT services), but remains strong relative to other video viewing sources. As further outlined in the Debrief, online video appears to be largely complementing rather than replacing traditional TV.

In a recent analysis of TV viewing trends, the GfK survey questioned Netflix users aged 13-54 about how their streaming affects their typical viewing of an assortment of programs using their regular TV service (whether broadcast, cable, satellite, or other). Though a majority said that it makes no difference to their viewing of new episodes of dramas (58%) and comedies or sitcoms (65%) on broadcast or cable TV networks, respondents were actually slightly more likely to say that it has made them watch more rather than less of these types of programs.

There appears to be a net (slight) positive effect on viewing of each type of programming when asked “… how does your Netflix viewing affect your typical viewing of… your programs using… regular TV service…”

• Reruns of episodes of comedies or sitcoms on broadcast or cable TV networks (28% watch more versus 22% watching less)
• Reruns of episodes of dramas on broadcast or cable TV networks (27% more; 25% less)
• Theatrical movies (those originally shown in theaters) shown on broadcast or cable TV networks (26% more; 19% less)
• New episodes of dramas on broadcast or cable TV networks (24% more; 18% less)
• Original movies shown on broadcast or cable TV networks (22% more; 21% less)
• Episodes of comedies or sitcoms on broadcast or cable TV networks (19% more; 16% less).

Source: GfK/MarketingCharts, September 2014

A recent forecast from Digital TV Research, says Marketing Charts, predicts that Netflix will surpass 100 million global subscribers by 2020, while a separate forecast covering 51 countries expects OTT revenues to grow from $4 billion in 2010 to $42.3 billion in 2020, with the US hanging on to its position as the leading market at the end of the forecast period (37% share).

For additional information, the TDG report is available for public purchase by visiting TDG’s website here.