Netflix Caused 50% of U.S. TV Viewing Drop in 2015 (Study)

Netflix TV ratings
Courtesy of Netflix

Netflix is leaving an indelible mark on the TV biz — and while the streaming giant isn’t dealing a fatal blow to the industry, it is seriously cutting into traditional television ratings.

In 2015, Netflix accounted for about half of the overall 3% decline in TV viewing time among U.S. audiences, according to a new study by Michael Nathanson of MoffettNathanson. The analyst calculated that based on an estimate that Netflix’s domestic subs streamed 29 billion hours of video last year (Netflix said members worldwide watched 42.5 billion hours in 2015). That would represent 6% of total American live-plus-7 TV viewing reported by Nielsen (up from 4.4% in 2014).

Moreover, Nathanson predicts Netflix’s total streaming hours as a percentage of TV viewing will continue to rise to about 14% by 2020. “Currently, Netflix is a source of industry pain, but not necessarily a cause of industry death,” he wrote in the note.

Executives at media conglomerates are now viewing Netflix as a growing threat. Time Warner CEO Jeff Bewkes, who once compared Netflix to the “Albanian army,” last fall said that the company may pull back on licensing TV content to SVOD services.


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But not all TV networks are suffering from the rise of Netflix and other streaming-video services, Nathanson noted. Total viewing of networks from Time Warner, Scripps Networks Interactive, AMC Networks and Discovery Communications rose in 2015. A+E Networks’ viewing hours declined 15%, Viacom fell 13%, and NBCUniversal and Disney each dropped 5% overall.

In comparing TV viewing of Netflix vs. non-Netflix households, broadcast networks took the biggest hit in 2015. CBS viewing among Netflix subs was 42% lower than non-subs, with Fox at -35%, ABC at -32% and NBC at -27%, according to Nathanson’s analysis.

Meanwhile, viewing time of Disney’s networks last year was 11% higher in Netflix homes versus non-Netflix homes. Viacom saw a “modest” 5% year-over-year drop in Netflix homes; in that case, “it is unclear if this is as a result of viewership which has already been negatively impacted by SVOD services in prior years, or if the company’s younger-skewing viewers are switching back and forth more easily to watch both linear television and SVOD services,” Nathanson wrote.

Based on viewing time, Netflix in 2015 was bigger than smaller cable programmers like A+E and AMC, but not as large as the seven biggest conglomerates (NBCUniversal, Disney, Viacom, Time Warner, 21st Century Fox, Discovery and CBS).

One caveat on the analysis: Nielsen’s Live+7 excludes online and mobile viewing on TV networks’ sites and apps. But Nielsen hours-viewed numbers adjust for co-viewing, whereas Netflix’s reported data is per household. According to Nathanson, that means Netflix per-person viewing is underrepresented relative to Nielsen Live+7; thus, the analyst assumes the two factors largely cancel each other out.

Other studies have compared Netflix’s viewing to traditional TV. The service was on track to attract a larger 24-hour audience than each of the major broadcast networks (ABC, CBS, Fox and NBC) some time in 2016, per an analysis last summer by FBR Capital Markets.

As of the end of 2015, Netflix reported 74.76 million streaming customers worldwide, including 44.74 million in the U.S.

One big challenge for Netflix now will be increasing its reach among older consumers, according to Nathanson, an age group that watches more traditional TV than younger demos. SVOD penetration among those 35-44 is 60%, then tapers off to 54% for the 45-54 cohort, 37% for 55-64 and 23% for those 65-plus.

Nathanson’s note Thursday, “Is Netflix Killing TV?,” is an update to one the analyst published last April.

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  1. Micah Page says:

    Time Warner has more problems to worry about than netflix. The CEO said they are not preparing for the next generation of fiber optics. I dont know about you but everyone i know and myself included wants faster internet at the same cost. Time warner keeps raising the prices, but still maintains the same slow speeds of <100Mps and as soon as Empire with fiber optics or Google Fiber optics comes to their town…..everyone is going to switch to internet only. No one cares about TV. The internet is TV now. And the faster that data can get to us the better. Any company trying to cling on to traditional TV will file for bankruptcy in the future.

    Obviously i am a time warner customer. But i only get internet. No need for landline phone, i have my cell. No need for TV i have internet. Netflix and hulu are not the only sources of TV on the web. As soon as another company comes to my town with fiber optics (they are currently 10 miles away) I am finally getting rid of the burden of Time warner. Seriously they are a joke.

    • Micah Page says:

      And i did Neilson surverys. Based on how they handled mine they are inaccurate as hell. I basically had numerous sources of TV from the web that i put down. But when they called they said they are only using 7% of my survery. AKA they are picking and choosing the data they want, and rinsing the rest away.

  2. Peter says:

    Time Warner won’t solve its problems by limiting the distribution of content to Netflix. As long as internet speeds allow streaming in high definition, people of all ages will continue to abandon cable and network TV. Why? Because there’s far better content and information to be found on the Internet, much of it commercial free and all of it available on demand.

    I’m a baby boomer who cut the cord a year ago and would never go back to cable or OTA TV, even if it were given to me. There are far too many ads, garbage shows, and “news” programs laden with corporate propaganda to make traditional TV worth my while.

  3. ddevonb says:

    I think the article misses an even more important factor. Since every major cable company and satellite service now offers most network entertainment shows programs to be streamed on demand, there is very little need to watch them live or even record them on the DVR.

  4. Karen Young says:

    Whoa Nelly! Where are these numbers coming from? He’s talking about specific TV viewing from Netflix households. Is this Nielsen data? Some kind of set-top-box data? Does he have his own meter or diary research? I’m not saying his results don’t sound plausible. But really, Variety, you’re falling down on the job here not to include this essential basic info. People don’t just do “studies” of TV viewing by network or show, at least not with the credibility of industry currency.

    • Todd Spangler says:

      It’s based on MoffettNathanson’s analysis of Nielsen data and Netflix-reported viewing figures.

  5. acharmedquark says:

    The funny thing for me, regarding the posted comments bashing network television, is the idea of content vis-a-vie Netflix, Hulu, et al.

    If you scrap all network television media, and their cable children (NBC owns SyFy, for example) then where will the quality content come from? Sure, Netflix makes quality programming, but at $7.99 per month they can only produce so much content.

    If you get your wish of eliminating network television, and you expect Netflix, Hulu and others to fill the void, expect subscription rates to climb very high as they produce more content.

  6. Sean says:

    The way we watch Television is changing, I Like Netflix, Hulu and other streaming services and plan to cut the cable cord when my contract is up, ill be keeping the internet and using digital antenna but will be mostly watching streaming services.. Network Tv is dying

  7. Chris says:

    Actually, I think some of the drop is related to greedy excessive time given to commercials. I can’t watch network TV any more because of the time devoted to commercials. Channels like CNN, that by the end of the show, have commercial spots longer than the actual screen time for the show are insane. That is why I dropped TV. I know TV isn’t free. That’s why I pay Netflix’s and other pay services. If they figured out to decrease commercials they might be able to get back in the game. Right now the time devoted to commercials is down right disgusting and make any show unwatchable.

    • Peter says:

      I calculate that half of cable TV is devoted to ads. For prime time, it’s 30% advertising. For sports broadcasts, it’s far more. You have station promos, product placement in movies and TV shows, scrolling ads at the bottom of your telecast, and then what about all those late night and weekend infomercials? Why would anyone in their right mind pay to be bludgeoned by commercials? Especially when your only relief from them is crappy “reality” programming?

  8. Harry says:

    The networks caused the decline in viewing. CBS does not stream on either Netflix or Hulu. The insistence of the major networks on broadcasting Battle of the Network Star Dancing Bachelors send viewers to something intelligible.

    • Mark says:

      Yup. I am down to 2 cbs shows. Their viewer is pitiful. The only one worse is NBC.

    • Jason says:

      Yep–this is pretty much the nail on the head. CBS actually has tried to start it’s own streaming service—that you have to pay for. Almost as much as Hulu and Netflix IIRC. That’s just silly. I’m all for a-la-carte streaming services, but you should know the value of your own product and CBS clearly doesn’t.

      • Peter says:

        Even worse, with the CBS subscription service, you have to endure commercials you can’t fast forward through.

  9. nerdrage says:

    50% sounds like a plausible figure. Is this across all demographics? I’d bet that the number is even worse for 18-49 since cord-cutting (or cord-nevering) skews young.

  10. Spike says:

    good! down with the dinosaur networks: ABC, CBS, NBC. they spew out nothing but drug ads, pre-approved “news” bites, and really bad, i mean really bad programming. they add nothing to the society but more psychiatric drugs via their ads, and they need to go down. Viva Netflix!

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