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Netflix – Friend or Foe?

21 July 2014

Joe Lewis, Project Director at BARB

So I’ve succumbed. It took me a couple of years but I’ve decided to check out what all the fuss is about and subscribe to Netflix, well, the free one month trial anyway.

Was I driven to this by a curious desire to watch content differently, where I want and when I want? Was I itching for more of a show that had come to the end of its current season? Not really. In fact, it was House of Cards. Admittedly I was still a bit slow on the uptake but as someone who loved the original, I needed to warm to the idea of another Francis Urquart.

Now that I have Netflix maybe I can finally answer the question I’m asked so regularly, who are Netflix subscribers? Well it turns out I didn’t need to be one of them to find out. A major virtue of working at BARB is the sheer abundance of high quality research at my fingertips, its curse: not enough time to look at it all.

BARB measures the television viewing (including viewing through computers) of a panel of over 5,100 households are selected to accurately represent the UK’s population. In order for us to ensure we are representing the UK as a whole, we survey over 53,000 households each year through our Establishment Survey to study the penetration and acquisition of television equipment and services in the UK.

Since January, we have added questions to our Establishment Survey on subscription to over the top video on demand (OTT VOD) services, most notably Netflix and Amazon Instant Video (Lovefilm). Being a comprehensive survey of over 13,000 households per quarter, this means we are able to analyse OTT VOD subscribers from multiple angles to understand more fully who this target group actually is.

There have been suggestions that Netflix, Amazon and other new arrivals in the OTT VOD services ecosystem are offering an alternative to linear television, particularly pay-tv, presenting a major risk and disruption to the current economic model. Having looked further into these subscribers, I am not wholly convinced by that viewpoint.

Amazon/Lovefilm

Netflix

All Households

4.5%

10.2%

BARB Establishment Survey Q1 2014 – 13,591 households

At a total household level, the penetration of Netflix and Amazon subscribers is clear to see. Our latest quarterly survey estimates that over 10% of all households are subscribing to Netflix and just fewer than 5% to Amazon/Lovefilm. Netflix’s growth is of particular interest considering its relative infancy in the UK market. Dig deeper though and you will find some rather interesting findings, which paint a rather less disruptive picture than some media commentators would have you believe.

The following chart shows Netflix and Amazon subscriber profiles indexed against the UK population. A further breakdown of profiles can be seen in the appendix.

VOD

BARB Establishment Survey Q1 2014 – 13,591 households

Taking Social Grade as an example, ABC1s account for 65% of Netflix subscribers but only 52% of All Households, meaning that Netflix subscribers are 24% (index of 124) more likely to be ABC1 than the general population. Looking at this across a multitude of demographics, we start to get a wider picture of who these subscribers are. Firstly, they are content lovers, already paying subscriptions to linear channels and indeed more likely to subscribe to movies and sports. They are also more likely to be multi-person households with children, own multiple televisions and skew heavily towards larger screens with HD reception. To me, this does not sound like a demographic that is in desperate need to watch television when they want and where they want. It sounds more like a typical young family wanting content to suit everyone’s tastes and needs. Which brings me to think, rather than being disruptive to current deliveries, perhaps OTT VOD services are complimentary to the traditional linear broadcast and platforms, simply filling a void that ‘Blockbusters’ or ‘HMV’ box sets have done in the past.

Quarter 2’s results (due out in August) should prove very interesting as to whether the growth in OTT VOD subscribers increase and indeed whether the current demographic skews we see currently continue, until then, a more comprehensive set of tables for quarter 1 can be downloaded.

Establishment survey data is free for all BARB subscribers and bespoke analysis can be provided by the following BARB data bureau, RSMB, TRP Research and Telmar. For more details see How can I get BARB data

As for me, I’ll continue with the spoils of the inner workings of Washington and my Netflix subscription, at least until the third season of Arrow returns…

Appendix

 Household ProfileIndex on All Households
All HouseholdsAmazon/LovefilmNetflixAmazon/LovefilmNetflix
Social Grade
...ABC10.5220.7020.65134124
...C2DE0.4780.2990.356373
Household Size
...Single0.3110.1340.0854327
...20.3350.3060.2939187
...3+ individuals0.3540.5610.622159176
Age of Head of Household
16-240.0360.0470.093131258
25-340.1450.2790.283192195
35-440.1710.2630.258154151
45-540.1950.2380.237122122
55+0.4540.1740.1293828
Presence of Children
...No0.7440.560.5767577
...Yes0.2560.440.424172166
...0-30.1010.1840.165183164
...4-90.1280.2230.216174168
...10-150.1180.210.205179174
No. Sets
...10.3860.3630.2889475
...20.3290.2840.2968690
...3+0.2360.3290.384140163
Screen Size Ownership
...Under 20"0.2170.2320.20710796
...20"-29"0.3660.3480.3469595
...30"-39"0.5080.60.534118105
...40" -49"0.3650.4490.52123142
...50" and over0.0780.1070.156137200
Platform/Equipment
...Sky0.3350.3620.392108117
...Cable0.1530.2230.274145178
...Freesat0.0390.0320.0481102
...Digital Terrestrial Only0.3890.330.2348560
...HD Reception0.5140.6430.696125135
Subscription
...Sky Sports Subscriber0.1920.2170.266113139
...Sky Movies Subscriber0.1480.1910.227129153

BARB Establishment Survey Q1 2014 – 13,591 households