When you are one of the 25 million Netflix U.S. streaming subscribers you take for granted how it works. Let me walk you through a conversation I had this past weekend. It went something like this:
Q: What channel is Netflix on TV?
A: It’s not a channel.
Q: When I call the cable company to order Netflix what do I ask for?
A: The cable company does not sell Netflix.
Q: What do you mean, who do I call?
A: You need a TV connected to the Internet. You can buy a box such as Roku.
Q: What is Roku, who installs it?
A: I’ll take care of it for you…
The inherent success of Netflix streaming can be attributed to its content library and TV centric strategy initiated in part by the Roku launch in 2008. In our new Connected Intelligence report, Application & Convergence, we measure how consumers are using the various devices they own. In Q4 2012 we saw 40 percent of individuals with a TV connected to the Internet were watching Netflix. And, streaming video users are continuing to migrate from the computer. Twenty-one percent of connected TV owners said they migrated from using over-the-top (OTT) video services on the computer and now watch on the TV instead.
In fact, more than half of consumers age 18-24 that have a TV connected to the Internet watch Netflix on TV. These numbers are staggering. So what’s next? Three drivers of growth come to mind when considering if and how OTT video will surpass linear TV viewing. That is, more TVs being connected to the Internet, further increasing awareness for the devices that deliver OTT video, and consumer recommendations. What channel is Netflix? The definition of a TV channel is changing. You no longer just tune to, say channel 27, to watch TV, pressing the Netflix button on the remote is just as easy. Well, at least after it’s “installed.”