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Netflix Users Streaming to the TV

The Diffusion Group (TDG) announced that, according to its newly published study, almost two-thirds of Netflix users that subscribe to a home broadband service are now viewing the ‘Watch Instantly’ streaming video service.

According to the statement, one-third of broadband-enabled Netflix subscribers view this streaming video exclusively only on their PCs, 8% view the content exclusively on their TVs, and 24% use both their PCs and TVs. “Netflix is now the archetype for over-the-top (OTT) streaming video services,” notes Michael Greeson, TDG founding partner and director of research. “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 implication of TDG’s research is significant: one-half of broadband-enabled ‘Watch Instantly’ users now view streaming video on their TVs, a phenomenon unimaginable just a few years ago. As Greeson points out, this speaks volumes about the maturation of streaming video technologies that, until recently, had delivered an inconsistent experience that left regular TV viewers wanting.

Greeson identifies 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.

As Greeson explains, “In combination, these factors laid the groundwork upon which Netflix could build a successful OTT video distribution business. And that’s precisely what it has done.”

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