Wall Street analysts at FBR Capital Markets have provided some staggering analysis about the future of TV, suggesting that, at its current rate, Netflix would surpass major networks like ABC, CBS, Fox, and NBC, in 24-hour viewership if it were to be measured by typical Nielsen standards, reports Variety.
It’s hard to compare, of course, given that even Nielsen ratings on standard broadcast TV can be off — people often view time shifted programs on DVRs and VOD well after the seven day window Nielsen claims to account for , and online viewing, which is growing in popularity, isn’t taken into account at all. Plus, let’s not forget that the TV has become such an integral part of the household, how many Nielsen homes simply have a show “on” during prime time hours, but are barely paying attention enough to consider it “watching?”
In the same respect, the data may weigh even more heavily in Netflix’s favor. If a subscriber is logged in to Netflix and streaming a program or movie, chances are pretty high that he’s actually watching it, and focusing on nothing else.
None of this would really matter to Netflix anyway. Once you pay your $9/mo. for a subscription, you could never watch a program and it wouldn’t make a difference. That money is already in Netflix’s pockets. That said, while advertising isn’t part of the Netflix model, viewership numbers could become increasingly important to its growth plans.
Most important is that the data suggests Netflix is indeed on the right track to capture more subscribers: if those who have already paid are making good use of their monthly fee, and enjoying it, others will want to get on board and see what all the fuss is about.
How did FBR come up with this data? The company took the hours that Netflix users streamed in the first quarter of this year – 10 billion – and rounded that out to about two hours per day per subscriber, based on Netflix’s last reported subscriber numbers. Divide that number by 24 hours, which is how Nielsen ratings are calculated, and multiply it by the number of U.S. Netflix subscribers, which would give you the percentage of households. That would mean Netflix has a rating of 2.6 – right in line with networks like ABC and NBC. Couple that with Netflix’s compound annual growth of 40%+ and the converse decline of traditional broadcasters, and well, this time it’s your turn to do the math. And that’s a much easier equation to figure out.
Even when it comes to pay TV, which may have once been a shining star for linear TV in the face of streaming competition, consumers still report preferring Netflix – 57% versus 43%, according to FBR data.
How fast Netflix can overtake traditional TV remains to be seen. But things are on an upward trajectory. FBR points out that, with Netflix’s anticipated $2 billion spend on content rights in the U.S. this year, that would surpass even the most lauded traditional networks, like HBO and Showtime.
As it stands, Netflix last reported having about 62 million subscribers worldwide. The math going forward is poised to have many more additions than subtractions.