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Netflix could overtake traditional media in viewership by 2016

Since Nielsen doesn’t track ratings for Netflix, allegedly due to pressure from traditional cable companies, the data had to be compiled by outside analysts, in this case FBR Capital Markets. Given that Netflix generated roughly 10 billion hours worth of viewing in the first quarter of the year, FBR concluded that each Netflix subscriber watched an average of two hours worth of content per day. This two-hour figure was then divided by 24 hours and multiplied by the number of American Netflix subscribers as a percentage of households in order to yield a Nielsen equivalent ratings score.

The result was a score of 2.6, which already puts Netflix on par with ABC and NBC. Add in the fact that Netflix is continuing to grow, while ABC and NBC are struggling just to maintain their audiences, and it seems reasonable to conclude that Netflix will surpass both by the end of the year.

Should traditional media companies worry?

Of course traditional media companies should be worried, but the battle for the attention spans of audiences is just beginning. And while traditional companies may have brushed Netflix aside when it first arrived in the market, many media companies are now working to emulate its success.

Investors of traditional media giants should be wary of potential cord cutters, of course, but Comcast and other traditional companies have been working furiously to adapt to the changing landscape. After Netflix, Hulu remains one of the most popular online viewing apps on the web, and the company is partially owned by Comcast.

Comcast has also launched a variety of online and multi-device streaming options, hoping to discourage cord cutting. Nielsen doesn’t fully track DVR, online streaming services, and others, so it’s difficult to gauge how successful these efforts have been. Either way, Comcast’s determination to not let Netflix dominate the online space is something that must be watched.

Time Warner’s HBO Now service, which allows viewers to skip cable company and directly subscribe HBO via the internet, has managed to reel in approximately a million users in its first few months of operation. Admittedly, these numbers were padded by customers who signed up for the company’s free 30-day trial, but the app now appears to be the most profitable app in the Apple iTunes store.

These developments only hint at the way cable companies have been adapting to the changing media consumption landscape. What’s clear is that the cable and media industry is quickly changing, and market turbulence tends to create both winners and losers.

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