CBS Research Chief Calls Netflix A 'Phenomenon,' Says It's Now As Big As A Mid-Size Cable Net

Netflix's online streaming service is rapidly emerging as an important gateway for accessing television programming, according to a tracking study revealed by a top broadcast network executive Tuesday during the most recent edition of MPG's Collaborative Alliance meeting in New York City. The executive, CBS research chief Dave Poltrack, used the term "phenomenon" several times to describe the rapid adoption of Netflix, especially among an important segment of the TV audience known as early adopters of next generation media platforms.

The research, which was part of a series of focus group studies CBS conducted in its Las Vegas testing facility, Television City, indicates that 43% of the early adopters - what Poltrack terms "fully connected" TV viewers who already subscribe to digital TV and broadband services, now subscribe to Netflix.

"Last summer, that number wasn't even large enough to have put it down as one of the choices" CBS asked its focus group respondents, he said, adding, "This is a real phenomenon."



Poltrack contrasted Netflix's remarkable growth with rather tepid adoption rates of other so-called "over-the-top" TV streaming platforms, such as GoogleTV, Boxee and AppleTV, but said that video game platforms such as Microsoft's Xbox, Nintendo's Wii, and Sony's PS3 have become a major means of streaming TV programming, and that many of those platform users are actually doing so via Netflix.

Poltrack estimated that the size of Netflix's prime-time streaming audience is about the same as a "mid-size cable network," and is growing fast.

Poltrack indicated the rapid uptake of Netflix is even more remarkable considering that the video rental and streaming service still does not offer many top TV shows for streaming, and he suggested that it might grow even more rapidly as it strikes content deals to do so.

"They don't have the content, but they certainly have the right ideas," he told the standing-room-only Collaborative Alliance audience.

Despite the fast growth of platforms like Netflix and online streaming service Hulu, and even Google's vaunted YouTube, eMarketer chief Geoff Ramsey presented data indicating that conventional TV viewing remains the dominant platform for consuming video content, especially full-length TV shows and movies.

Ramsey sought to dispel false reports and industry speculation that online video streaming is challenging television's dominance as a source of video programming. Based on an analysis of fresh eMarketer data, aggregated from a variety of leading industry sources, Ramsey said that the average amount of time Americans spend with online video still is nearly half of TV's: two hours and 35 minutes vs. four hours and 24 minutes for TV, on average.

While the majority of American consumers now stream online video, he said that the amount of time they spend doing so still pales relative to television.

However, he said the behavior of American video consumers is shifting from "video snacking" of online video content to viewing of full-length movies and TV shows, making it an alternative channel to conventional TV platforms, especially for Millennials, many of whom now use online streaming as their primary source for video content.

Overall, Ramsey estimated that an "eight percentage point" gap exists between the amount of time American consumers spend watching video online, and the share of advertising dollars allocated to it, but he said online video advertising is growing rapidly - more than 50% per year currently.

1 comment about "CBS Research Chief Calls Netflix A 'Phenomenon,' Says It's Now As Big As A Mid-Size Cable Net".
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  1. Sheila Seles from Advertising Research Foundation, June 8, 2011 at 11:48 a.m.

    Seems to me that Netflix subscribers are hardly early adopters at this point. This on-demand behavior is commonplace, and TV networks had better start paying it more than lip service. Poltrack’s comments are interesting: on one hand, he says they have the model right, but not the content; and on the other hand, CBS isn’t willing to license new content to subscription based services like Netflix. Of course people are still watching linear TV—it’s the only place they can get linear TV content. If networks really think Netflix is a “phenomenal” distribution model, why aren’t they trying harder to monetize it? Isn’t VOD just the MSO version of Netflix? Netflix kills VOD in terms of content all because networks won’t give their premium linear content to VOD either. The industry’s caught in this frustrating catch-22: until subscription/VOD has a viable revenue model behind it to support TV content, it’s not really going to be useful to networks. And until networks jump in and start giving content to subscription/VOD, there isn’t going to be a viable revenue model. Someone will eventually break this stalemate and be the first mover here, and I suspect that party will come out way ahead.

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