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Cable Technology Feature Article

September 26, 2014

Netflix Grows 350 Percent, as STBs Become Preferred Access Methods

By Tara Seals, TMCnet Contributor

Netflix streaming continues to ramp up, by 350 percent in fact, but not everyone is watching House of Cards and Orange (News - Alert) is the New Black in quite the same way. New research has revealed that a growing number of U.S. households are relying on dedicated set-top boxes (STBs) and digital media players to watch Netflix on a TV set, rather than via laptop or mobile devices.

According to a survey from GfK study, 28 percent of those who stream Netflix on a TV are turning to devices like Roku, Apple (News - Alert) TV or Chromecast—and this is nearly double the 2013 level (15 percent). It’s also roughly five times the 2011 figure (6 percent). The surge comes as ownership of the players among all homes has increased tenfold – from 2 percent to 21 percent—since 2010.

Meanwhile, gaming consoles like the Xbox 360 and Sony PlayStation are still the most common hardware for Netflix viewing on a TV screen, having been first movers in the stream-to-big-screen movement. But, they’re now used much less than they were three years ago. Console use has dropped to 43 percent, down 5 percentage points from 2013, and almost 20 points below the 2011 level (62 percent).

Connected TV is on the rise too; streaming capabilities built into today’s higher-end TV sets have also become popular, with use of built-in streaming reported by 28 percent of those who watch Netflix on TV—up from 20 percent a year ago and 13 percent in 2011.

It’s important to note however that the report shows wide generational differences in how people access Netflix. Generations X and Y are twice as likely as Baby Boomers to use a video-game system to watch Netflix on TV. Capabilities built into TV sets are highly favored by Gen Y Netflix viewers, and both Generations X and Y show strong use of digital media players.

“The wide variations in devices used – and in preferred device by age - speak to a need for Netflix and other SVOD providers to optimize the U.S.er experience for each situation,” said David Tice, senior vice president at GfK. “Not only do the device interface and remote control need to be U.S.er-friendly, but things like on-screen font size and menus. need to be age-appropriate. With a quarter of Netflix users also being Amazon Prime or Hulu (News - Alert) viewers, there is a potential battle in U.S.er experience as well as in variety and exclusivity of content.”

The results come as Netflix usage continues to grow impressively: streaming traffic has increased 350 percent during the last 10 quarters according to the Diffusion Group (TDG), reaching seven billion hours as of the second quarter of 2014. That’s up from two billion hours in the fourth quarter of 2011.

“When Netflix first launched in 1998 as an innovative DVD-by-mail subscription service, it would have been difficult to imagine that not only would it pass HBO to become the largest premium TV/movie subscription in the U.S., but that it would be ramping up a formidable international streaming business,” said Bill Niemeyer, senior adviser at TDG.

Broken down by geography, TDG said that total streaming among U.S. Netflix subscribers rose from 1.8 billion hours in to 5.1 billion hours, almost tripling during the period. Meanwhile, total international streaming grew from 0.2 million hours to 1.9 million hours, a 10-fold increase that reflects the company’s ongoing global expansion.

Edited by Maurice Nagle

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