The announcement that Netflix added more than 8 million global paid subscribers in its latest quarter, shows streaming continues to gain momentum. Netflix now has a total of 278 million paid subscribers around the world, marking 17% year-over-year growth.
Netflix stands as a prime example of the streaming revolution’s success. Founded in 1997 as a DVD rental service, Netflix pivoted to streaming in 2007, marking the beginning of its rise to dominance. The company’s commitment to original content has been a key driver of its success. With critically acclaimed series like “Stranger Things,” “The Crown,” and “The Witcher,” Netflix has not only captivated global audiences but also established itself as a formidable player in Hollywood.
In 2001, Netflix had just 400,000 subscribers, with the U.S. market accounting for 100% of its subscriber base. Today, 70% of its subscribers are outside the U.S. and Canada. The platform’s extensive content library trails only Prime Video, which offers 14,206 movies and TV shows, compared to 6,472 for Netflix.
Netflix’s user-friendly interface and large investments in content — $17 billion in 2024 alone — sets it apart from the competition. Moreover, Netflix’s ability to adapt to changing viewer preferences, such as offering downloadable content for offline viewing, has solidified its position as a market leader.
As of the second quarter of 2024, Amazon Prime Video and Netflix hold the largest market shares in the U.S. streaming market, with 22% each, followed by Max at 14%.
Cord Cutting
The rise of cord-cutting, the act of canceling traditional cable or satellite television subscriptions in favor of alternative streaming services, has become a significant trend worldwide. Several factors, including the availability and affordability of streaming services and a desire for more personalized viewing experiences, have led to a shift away from traditional cable service:
- High cost – One of the primary reasons for cable-cutting is the growing dissatisfaction with the high cost of traditional cable TV. According to a 2023 report by Leichtman Research Group, the average monthly cable bill in the U.S. has surpassed $100, making it a substantial household expense. In contrast, streaming services like Netflix, Hulu, and YouTube TV offer more affordable monthly subscription options, typically ranging from $10 to $80.
- Flexibility – The average cable television subscriber pays for 240 channels but only watches 17. Streaming services offer on-demand content that can be accessed anytime, anywhere, on various devices. And, unlike cable TV, which often requires long-term contracts and additional fees, streaming services can easily be paused when needed. That flexibility and convenience resonate particularly well with younger generations, who prioritize mobility and flexibility in their entertainment choices.
In 2021, 95 million Americans paid for a pay-TV subscription. Even including live TV streaming services, that number dropped to 70 million in 2023. According to Statista, more than 5 million subscribers cut the cord in 2023. That is in addition to the 6 million the cable TV industry lost in 2022.
Cord-cutting decreased pay TV penetration — including live TV streaming services like YouTube TV — to just 55% of occupied households, the lowest household penetration since 1989. Deloitte survey data shows that for the first time, more respondents had at least one streaming video subscription (69%) than had a traditional pay TV subscription (65%). A beneficiary of this trend is YouTube TV, which, according to MoffettNathanson, is the largest live TV streaming service, with nearly 7 million subscribers.
Streaming services, however, have also been raising subscription fees at an unrelenting pace, leading many Americans to cancel more of their streaming services.
According to November 2023 Antenna data, about one-quarter of U.S. subscribers to major streaming services, including Apple TV+, Discovery+, Disney+, Hulu, Max, Netflix, Paramount+, and Peacock, have canceled at least three of them over the past two years. Two years ago, that number stood at 15%, indicating that streaming users are increasingly sensitive to price increases.
Local ABC, CBS, FOX, and NBC station owners have been lobbying the FCC to classify streaming services like YouTube TV as cable TV companies. This would let these owners change the terms of how YouTube TV, Hulu, Fubo, and more get access to local TV stations and extract more money from live TV streaming services.
At the going rate, some streaming companies may have spent billions to invent cable TV.
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