Netflix Is King of Paid Streaming, Study Says

The number of the U.S. households subscribing to any online streaming service has risen to nearly two-thirds

Last Updated: April 14, 2016 @ 7:21 AM

Netflix beats all its streaming-video rivals both on number of members and success rate of keeping them signed up, a new study said Thursday.

But the rest of the over-the-top market doesn’t need to fear: More people in the U.S. are joining up to these services overall, which include the likes Netflix, Amazon Prime, Hulu and HBO Now. High-speed-Internet households that subscribe to a streaming video service rose to 64 percent from 59 percent, according to a study from researcher Parks Associates.

And that might not be great news for traditional TV.

The data underscores the wider trend of consumers shifting more of their entertainment diet to online alternatives versus regular television, draining TV programmers’ biggest businesses. Though studies show overall consumer viewing is on the rise, the growth in digital has taken a bite out of traditional television ratings, which determine how much networks charge for ads.

Fear about missing out on the next big video audience has spurred programmers like HBO, CBS, Showtime and others to launch their own personal versions of Netflix. But the money generated by their new online options pales in comparison to the advertising revenue racked up from traditional TV viewing.

Parks reported if a U.S. household subscribed to any OTT service, more than half of them were signed up with Netflix. Netflix was also the best performer on limiting cancellations, or what is known as churn. In the past 12 months, 5 percent of U.S. broadband households cancelled their Netflix account, which was 9 percent of the company’s current subscriber base.

At Amazon Prime Video, 19 percent of its subscriber base cancelled. (And about a quarter of people with a subscription to Amazon said it was so that they can stream video, the study said.)

But at Hulu, the picture was bleaker: 7 percent of U.S. broadband households canceled a Hulu subscription in 2015, representing about half of Hulu’s subscriber base.

However, subscribers were churning out of OTT services at a higher rate generally in the last half of 2015. About 20 percent of U.S. broadband households said they cancelled at least one OTT video service at the end of last year, compared with 18 percent saying that about six months earlier.

Parks director of research Brett Sappington said several factors contributed to OTT video service churn. Sometimes consumers are testing out new services and canceling before a trial period ends or after a few months.

“Popular shows or events, such as HBO’s ‘Game of Thrones’ or WWE Network’s ‘Wrestlemania’ can be beneficial in terms of attracting users. However, there is a risk that consumers will unsubscribe once they’ve watched these popular items,” Sappington said.

The top three — Netflix, Amazon and Hulu — gobble up the vast majority of the OTT market. Only 5 percent of U.S. broadband households have a subscription to one or more of the 110 options beyond those three, according to the study.