Media

Netflix Finishes First in Streaming Survey

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In the first quarter of this year, half of all U.S. households had a paid subscription to a video streaming service. That is the same percentage as the number of households that use a digital video recorder (DVR), but the streaming number is rising while the DVR number appears to have plateaued.

Among five major U.S. subscription streaming services, the best, according to a recent survey by J.D. Power, is Netflix Inc. (NASDAQ: NFLX). Hulu, which is owned by a consortium including Walt Disney Co. (NYSE: DIS), Twenty-First Century Fox Inc. (NASDAQ: FOXA), Comcast Corp. (NASDAQ: CMCSA) and, since earlier this month, Time Warner Inc. (NYSE: TWX), was ranked second.

The J.D. Power study measured customer satisfaction on six key metrics: performance and reliability; content; cost of service; ease of use; communication; and customer service. Scores for each measure are reflected in an index based on a 1,000-point scale.

Top ranked Netflix scored 829 and Hulu scored 821. The industry average score was 820. Third-ranked Vudu, owned by Wal-Mart Stores Inc. (NYSE: WMT), scored 810, Apple Inc.’s (NASDAQ: AAPL) iTunes scored 807 and Amazon.com Inc. (NASDAQ: AMZN) scored 806.

Netflix led or tied for the lead on all six metrics, and it scored exceptionally well on performance/reliability and customer service. Hulu’s cost of service and communication were its highest scoring metrics.

Among the more interesting things that emerged from the study is that 60% of streaming video subscribers also subscribe to a traditional cable/satellite service (cord stackers). Just 13% are cord-cutters and 4% are cord-nevers; that is, they have never subscribed to cable/satellite programming. Another 23% subscribe to both pay TV and streaming but have reduced their pay-TV package (cord shavers).

How satisfied were people with streaming video? That depends. Using the 1,000-point scale, cord cutters were the least satisfied (802) closely followed by cord-nevers (807). Satisfaction with their streaming service was highest among cord stackers (826) and cord shavers (822).

Other findings from the J.D. Power survey include:

  • Binge-Watching High: Nearly two-thirds (62%) of customers use a streaming service to binge watch—the act of watching multiple episodes in succession—TV programming. Overall satisfaction is 35 points higher among those who binge watch vs. those who do not (834 vs. 799, respectively). As binge-watching sessions increase in duration, so does overall satisfaction: 823 among those whose most recent session lasted less than four hours; 841 among those whose session lasted 4-8 hours; and 858 among those whose session lasted 8 or more hours.
  • Television Remains Primary Viewing Device: Nearly two-thirds (65%) of customers view streaming content through their TV; 55% view content on a laptop/desktop computer; and 48% view content on a mobile device. More than half (56%) of viewers use multiple devices to watch streaming video.
  • Original Content Viewership Higher among Streaming-Only Subscribers: More than half (54%) of cord nevers and 49% of cord cutters view original content vs. 43% of cord shavers and 41% of cord stackers.

A J.D. Power executive summarizes:

The streaming video customer experience appears to be stratifying across the different subscriber segments, with pay TV service still having a major effect on the overall streaming video experience. Part of the reason is demographics. Customers who only stream are younger than those who also have TV. Nearly two-fifths (37%) of customers who only stream are 18-34 years old, compared with 30% of those who also have TV. Notably, 52% of cord nevers are 18-34. Also, streaming-only customers are less likely to use transaction-based streaming services, which perform higher in the content measure.

The 2016 Streaming Video Satisfaction Study is based on responses from 3,928 customers. The study was fielded in June and July, 2016.

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