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Netflix is eating TV's dinner: 'The average Netflix user in the US streams for two hours per day'

Reed HastingsGettyNetflix CEO Reed Hastings.

The average Netflix user streams movies and programs for two hours a day, according to estimates from Rich Greenfield, an analyst at BTIG Research.

That’s huge.

Not only is that mean average number up around 18 minutes per subscriber per day on BTIG’s last estimates, but it is a major benchmark that suggests Netflix is really eating traditional TV’s lunch.

If you compare that number to traditional, live TV viewing, where the average American sits in front of the box for around 5 hours every day, according to Nielsen, that might not seem like a huge dent. 

But as our CEO and editor-in-chief Henry Blodget put it:

In fact, BTIG says that were Netflix a domestic US broadcast network, it would sit somewhere between the number one and two most-watched network.

However, it’s worth nothing that Netflix is only available in 40% of the homes that broadcast and cable network rivals reach on a monthly basis, so the comparison isn’t solid yet.

These are not official Netflix figures. On the Netflix Q1 earnings call on Thursday, Greenfield put its estimation to Netflix CEO Reed Hastings, who responded: “Well, I’ll leave that speculation to you. And when we get to great milestones, there’s a fair amount of seasonality. We might hit numbers like that in peak times, like holiday period, but not necessarily sustain that over the whole year.”

However, as Greenfield points out, it’s not clear whether Hastings was referring to domestic subscribers, or total subscribers here.

Here’s how BTIG did the maths:  It first took Netflix’s official stat that its users had stream 10 billion hours last quarter.

Then, the analysts used Netflix’s Q1 2015 guidance that there were an average of 40.01 million domestic streaming subscribers, which equates to 67% of average total streaming (the rest international.)

Taking on the assumption that domestic subscribers stream far more content per day than international subscribers, and that 73% of usage was domestic, this equals around 7.2 billion hours streamed in the US in Q1 this year. Or 2.4 billion hours per month. If you divide the 7.2 billion figure by the average subscriber base of 40.01 million, and the 90 days in a quarter, you reach a 121 minutes per user per day figure.

It’s little wonder, then, that Netflix CEO Reid Hastings said on his company’s Q1 earnings call on Thursday that while TV had “an amazing 50-year run,” that momentum is coming to an end.

Hastings said:

Linear TV has been on an amazing 50-year run. Internet TV is starting to grow. Clearly over the next 20 years Internet TV is going to replace linear TV. And so I think everyone is scrambling to figure out how do they do great apps, how do they things like “Noggin” which are fantastic. That will just keep getting built up and so it’s a transition into figuring out the Internet. And the way people do that is to get involved with us, with our competitors to try to start to learn what are the new patterns and modalities because Internet TV is the way that people will consume video in the future.

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