Digital | 3:18 February 19, 2010 | Sam Andrews | Print this story

Netflix finds streaming success

Almost two-thirds of US rentals-by-post giant Netflix’s users that have broadband in their homes are now viewing the “Watch Instantly” streaming video service, according to new media research firm TDG.

A new report for TDG found that one-third of broadband-enabled Netflix subscribers view movie streams exclusively only on their PCs, 8% view exclusively on TV and 24% use both their PCs and TVs.

“Netflix is now the archetype for over-the-top (OTT) streaming video services,” said TDG founding partner and Director of research Michael Greeson. “Not only has Netflix eclipsed its immediate competitors in terms of online DVD rental, but it has quickly become the ‘gold standard’ for new OTT streaming services.”

The report noted that half of broadband-enabled ‘Watch Instantly’ users now view streaming video on their TVs — “a phenomenon unimaginable just a few years ago”.

Greeson said it spoke volumes about the maturing of streaming video technologies and he identified several factors critical to this early success:

Netflix built a sizeable base of loyal service subscribers prior to launching its streaming service.

These subscribers had already demonstrated an ability to think beyond traditional content distribution schemes (e.g., renting a DVD at the local video store). In other words, they were predisposed to try novel, unproven methods of video delivery (in this case, online DVD rental).

Netflix was able to establish proof of concept by delivering streaming video to the PC before it tackled the more costly and uncertain issue of TV delivery (a market space littered with the corpses of well-intentioned efforts).

Though initially dependent upon a dedicated set-top box (Roku), Netflix moved aggressively to embed its streaming solution in a wide array of traditional CE platforms, thus reducing (if not eliminating) the consumer risk associated with trying an unfamiliar and unproven delivery scheme.