Netflix CEO sends congratulations to his team via his preferred medium of communication, Facebook. Netflix continues to flex its muscle as the negative feedback from their botched product split had the company in the news for all the wrong reasons. Netflix still remains the most popular company that provides streaming video services across tons of devices. Reaching 1 billion hours of streaming content is a huge boost for the company still hoping to launch more original content, as Mr. Hastings alludes to in his wall post.
While the company did lose millions of customers in recent years due to the attempt to split the streaming and DVD services into two separate companies, they reported an estimated 26.5 million subscribers as of last month. Taking that number into account, the amount of time spent streaming video per user, per day, to reach 1 billion hours total, would be a little over an hour a day. That’s huge. Given the fact that the average American spends about 5 hours a day watching television, that one-hour chunk is pretty significant. With more and more households buying gaming consoles, internet connected televisions, and tablets, the hours previously consumed by the television will likely continue to decrease, which of course is good news for streaming services like Netflix. Well…sort of.
Wedbush Securities analyst Michael Pachter says that “Netflix is starting to cannibalize cable-TV viewership and it could start cannibalizing advertising, too.” If that happens Pachter warns that Big Cable will raise its licensing fees for the shows Netflix needs to survive, thus forcing Netflix to either raise its prices or eat the new costs. So these new numbers could turn out to be a gift and a curse for the company. While more users are going to flock to their streaming services and increasing their flat-lined stock price, the imposing threat Netflix poses to Big Cable may put the major networks on the defensive, trapping Netflix in a fight it cannot win, but certainly cannot afford to lose.