Netflix is Kicking Ass and Taking Names

Subscription-based, streaming content provider Netflix, Inc. (NASDAQ:NFLX) might just be the most watched cable network. According to The Holywood Reporter,  Reed Hastings — the CEO of Netflix — announced via his public Facebook page that four billion hours of content were streamed through the company’s service in the first quarter of 2013. This has led BTIG Research analyst Richard Greenfield to declare Neflitx “now likely the most-watched cable network, essentially in-line with the Disney (NYSE:DIS) Channel.”

However Greenfield’s analysis depends on some factors that have to be assumed, according to Multichannel. First off, it relies on converting the Netflix CEO’s four billion hours of content streamed in the first quarter of 2013 assertion to only US viewers–Hastings’ figure was global. Greenfield estimates that just north of 88% of this global streaming number Hastings posted happens in the US. Next, he estimates the number of US Netflix subscribers at the end of the first quarter of 2013 at 28.1 million. This breaks the numbers down to an average of 87 minutes streamed per subscriber per day in the US, or 43 hours streamed per subscriber per month.

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While these numbers are very impressive, Netflix’s business model does not directly benefit from more hours of viewership a day, week or month–just more subscribers. The company does not run advertisements, which is certainly a draw for many. This is in contrast to “real” cable and broadcast networks that run advertisements (some premium channels excluded) and benefit from total hours of viewership since it translates into more eyes seeing each ad. In fact, Netflix might very well see itself as a premium cable network that managed to break free of the distribution channel controlled by the major cable and satellite providers. It would not be far off, especially given its recent push to produce and distribute a number of original series.

Greenfield is not entirely convinced that Netflix’s push into original series is significantly improving viewership. He wrote, “it is worth pointing out that in Reed Hasting’s June 2012 Facebook post, he indicated that when House of Cards and Arrested Development launched, streaming hours would blow away the current run-rate. While Arrested Development does not hit until May, streaming hours are climbing per person/per day, but we would be hard pressed to call it blowing away prior stats at this point.” In the summer of last year, Greenfield estimated Netflix subscribers were watching an average of 79 minutes per day.

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The big question is how much of a boost Netflix is receiving and will receive from its original series. House of Cards launched on February 1st, and in a bold move, Netflix released all 13 episodes of the first season at once. Unfortunately, there is no tangible viewership information available for the show yet. Quirky, cult-classic Arrested Development arrives on Netflix for a new season next month but it remains to be seen if it will attract new subscribers. Another Netflix original series–Hemlock Grove–launches later this April. One thing clear is that Netflix is in the original programming game for the long haul.

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