Online Content Wars Sparked By Dueling Platforms, Partnerships, Innovation

Call it the Online Content War, but in the past several days, the major online entertainment content platforms have unveiled a new spate of gadgets, partnerships, and deals that are creating turmoil in the content marketplace and on Wall Street.

Shares of Pandora took a tumble this morning on a Wall Street Journal report that Apple is readying a rival online radio-like service, and Netflix shares have tanked following an announcement by that it was partnering with pay TV service Epix to offer a slew of Hollywood films to its Prime movie downloading service.

Amazon also officially launched several new versions of its Kindle and Kindle Fire tablets (see related story in today’s Online Media Daily) that are likely to increase its share of the tablet marketplace as well.

The rate of content platform innovation and change is tumultuous for rights-holders, distributors and consumers alike, and demonstrates the speed with which markets can be made or broken with relatively little barrier to entry from new players.

It was only about a year ago that Netflix was being touted as the next big content platform, with CBS research chief David Poltrack noting that it already was the size of a major cable TV network in terms of its audience reach. A year later, other platforms including YouTube, Hulu, and premium services like’s Prime seem to be taking some of its thunder.

New research released Thursday by market researcher GfK Media seems to suggest that while it has accumulated significant mass, Netflix is indeed vulnerable.

The report indicates that the average Netflix user (ages 13 to 54) watches 5.1 TV shows and 3.4 movies per week via the service. Using conservative length estimates for TV shows and movies, (30 minutes and 1.5 hours, respectively), GfK said that means that an average Netflix subscriber spends about 8 hours a week watching the service. “This is double the time than an average person (ages 13 to 54) spends using a video game system (about 3.5 hours a week),” according to the report.

Overall, the study found that 47% of 13- to 54-year-olds have ever used Netflix, and 39% are monthly users -- up from 35% in 2011.

Despite those levels, GfK Senior Vice President Dave Tice says there is softness in the loyalty of Netflix’s users, with nearly 4 in 10 (37%) subscribers still having a negative view of the brand in the aftermath of 2011’s pricing missteps. Moreover, 51% would be willing to switch to a similar service if it was offered by their pay TV service, which compares with 45% in 2011.

“In a short time, Netflix has carved out a powerful role in US media, providing the kind of content control and user-friendly interfaces that consumers demand now,” says Tice. “Netflix clearly has built a model worth emulating -- but it will have to fight harder to sustain brand loyalty and its position as market leader.”

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