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Netflix Binges Account for Half of Lost TV Viewing

Streaming service is bigger than the smallest cable network companies, according to research by a widely followed analyst

Netflix is the main culprit dragging viewing away from traditional TV, even if the streaming-video giant’s sting hasn’t been fatal for TV companies — yet– MoffettNathanson analyst Michael Nathanson said in a study Thursday.

Hours spent watching traditional TV live or within the first week of airing dropped about 3 percent last year, and about half of that decline can be attributed to Netflix, Nathanson said, based on an analysis of Nielsen data.

He said the number of hours Netflix streams in the US equals about 6 percent of traditional TV viewing, up from 4 percent a year earlier, essentially making the streaming service bigger than smallest cable network companies, but smaller than the seven cable and broadcast giants.

“Netflix is a source of industry pain, but not necessarily a cause of industry death,” Nathanson wrote.

Netflix, the biggest online subscription video service by total users, is one of the strongest forces changing how people watch TV and the kinds of content they choose to view. But the company’s refusal to disclose detailed data about how much viewing it draws in has rankled traditional programmers.

Even Nathanson’s data came with a few caveats, which acknowledge that the comparisons aren’t exactly apples to apples.

His calculation of Netflix’s U.S. growth in hours is “massaged” from the company’s disclosure in January that global hours streamed reached 42.5 billion last year, up 47 percent from a year earlier.

Meanwhile, the traditional TV viewing hours included live viewing, time-shifted viewing on DVRs and some video on demand, but didn’t include any viewing through connected devices like Apple TVs or Roku set-top boxes that stream programming over the Internet onto a television.

That’s one of the most popular ways people watch Netflix, and the company’s global consumption figures include that kind of viewing.

The traditional TV viewing hours also didn’t include viewing on tablets or through subscription video services like HBO Now, CBS All Access or Hulu, platforms through which people are increasingly watching traditional TV programmers’ content streamed directly by the programmers themselves.

But even with the imperfections in the data, the trends in the study emphasize that Netflix and other online services are having meaningful effects on young people and the affluent, two crucial segments in the TV market.

The flip side to those trends is that Netflix must court older and poorer consumers to grow, and they are the demographics that appear satisfied with traditional TV choices, Nathanson said.

Among trends affecting specific networks, the biggest gaps in viewing hours between homes that have Netflix and those that don’t are at the four broadcast networks and Fox News. But networks like ESPN and Adult Swim enjoy more viewing hours in households subscribed to Netflix than those that aren’t, suggesting they remain essential for the streaming service’s members.