In
four years, Netflix looks to double its size in terms of streaming viewing relative to traditional U.S. linear viewing -- also possibly higher pricing to consumers.
MoffettNathanson Research says
by the first quarter of 2019 Netflix’s streaming in the U.S. could hit between 14.3 billion and 21.8 billion hours -- up from 8.6 billion in the first quarter 2015.
This means Netflix
would then represent 12.2% to 22.6% of all total linear TV viewing. Currently, it’s 6%. First-quarter 2015 linear U.S. TV viewing was 129.5 billion -- estimated to decline to 96.6 billion to
117.6 billion by 2019.
Giving a broader view of Netflix -- relative to the entire traditional pay TV market -- Netflix pulled in $3.4 billion in U.S. revenue in 2014. That’s a 3% share
of the entire pay TV multichannel market -- $104.6 billion.
MoffettNathanson says that when looking at subscribers, in 2014 Netflix had 39 million versus 99 million for the entire pay TV
marketplace -- a 40% share.
The research cites estimates from Craig Moffett, who says those 99 million U.S. pay TV homes pay on average $88 a month. By way of comparison, Netflix charges
around $8.50 a month on average to its customers. That spells opportunity for Netflix.
MoffettNathanson says: “We would argue that given the massive amount of consumer spending in the
U.S. on pay TV and the growing ubiquity of Netflix’s service, there is plenty of room for Netflix to run on pricing before hitting an upper ceiling.”