Is Streaming Going to Affect Total Netflix Views?

By Gary Kim May 06, 2011

Netflix, which dominates the "rent a movie by mail" business, is always watched closely as a barometer of how the online video business might be growing. Part of the reason is indirect. As Netflix adds more subscribers and starts to represent more of the time consumers spend watching video and linear multichannel TV in particular, Netflix rentals represent a shift of viewing modes in the direction of "on demand" and "time shifted" viewing.

In part, Netflix streaming delivery is also watched as an indicator that more mainstream users are becoming accustomed to the idea of streaming as a delivery substitute for physical media. The percentage of content being streamed by Netflix customers has been increasing over the last year, and Netflix has started to offer its first "streaming only" packages.

But one thing clear has changed: Netflix statements about its own business. Five years ago, it would have been common to hear Netflix CEO Reed Hasting saying that although the company was prepared for an inevitable shift to online delivery, Netflix growth would continue to be driven by physical delivery using the postal service for quite some time.

The language began to change a couple of years ago, and now seems clear enough. “Streaming is the core of our business and it is growing rapidly,” Hastings now says. 

You might interpret that in a strategic sense, as telcos continue to make most of their money from voice services, but where broadband, mobility and video actually represent the growth. In that sense, streaming is the "core" because streaming might drive most of the growth over the next several years, even though physical delivery represents most of the current revenue. 

“Streaming is much bigger than DVD for us in terms of hours of viewing, growth, and focus," says Hastings. "We are seeing massive consumer adoption of streaming.” 

One clear sign of that would be new data showing that Netflix DVD growth might have peaked,  measured either in terms of new subscriber growth or volume of rentals, for example. 

Any sign that physical DVD shipments for Netflix drop, compared to the prior quarter, would be such a sign, especially if subscriber growth continues and rental volume grows. But it would be only one sign among many. Right now, Netflix is more appropriately seen as a substitute product for HBO, Blockbuster or Redbox than anything else. 

Not until firms such as Netflix are able to offer the same "channels" as cable, satellite and telco TV services will we be able to assess how well online delivery competes with linear TV services. "TV Everywhere" services actually do not provide as much insight, as the online content is tied to purchase of the legacy services.


Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Carrie Schmelkin

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Consumer Privacy in the Digital Era: Three Trends to Watch

By: Special Guest    1/18/2018

Digital advertising has exploded in recent years, with the latest eMarketer data forecasting $83 billion in revenue this year and continued growth on …

Read More

CES 2018: Terabit Fiber - Closer Than We Think

By: Doug Mohney    1/17/2018

One of the biggest challenges for 5G and last mile 10 Gig deployments is not raw data speeds, but middle mile and core networks. The wireless industry…

Read More

10 Benefits of Drone-Based Asset Inspections

By: Frank Segarra    1/15/2018

Although a new and emerging technology, (which is still evolving), in early 2018, most companies are not aware of the possible benefits they can achie…

Read More

VR Could Change Entertainment Forever

By: Special Guest    1/11/2018

VR could change everything from how we play video games to how we interact with our friends and family. VR has the power to change how we consume all …

Read More

Making Connections - The Value of Data Correlation

By: Special Guest    1/5/2018

The app economy is upon us, and businesses of all stripes are moving to address it. In this age of digital transformation, businesses rely on applicat…

Read More