Study: Netflix Dominates Web Streaming During Prime Time

Service Captures 33% of Web Viewing Based on Internet Traffic in September

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Netflix increased its dominance of the online viewing market in a study, defying predictions that newer players would carve into the company's market share.

Netflix captured 33% of prime-time web viewing based on internet traffic in September, eclipsing Amazon.com, Hulu and Time Warner 's HBO Go by a multiple of at least 18, Sandvine Inc. said in its "Global Internet Phenomena Report" released Wednesday.

"People are absolutely using their Netflix service," said Dave Caputo, chief executive officer of Waterloo, Ontario-based Sandvine, a network services and research company. "I don't know whose library is better or bigger, but it's very clear that people use Netflix a lot more."

The findings feed a debate between investors who laud the company's early lead and international expansion and skeptics who cite slowing U.S. growth and losses in new foreign markets. Billionaire Carl Icahn said last week he holds an almost 10% stake in Netflix and views the stock as undervalued based on its market position and growth prospects.

The rising popularity underscores the strategic advantage Netflix has gained with its online service and efforts to make streaming accessible on everything from televisions and game consoles to mobile devices. Sandvine said the company should maintain at least a 10-fold lead over competitors through 2014.

The company's share of peak internet viewing traffic has climbed from 20.6% in the second half of 2010, Sandvine said. It stood at 32.7% a year ago. By comparison, Amazon's market share amounted to 1.75% in September, while Hulu garnered 1.38% and HBO Go had 0.52%, according to the study.

U.S. households have more than doubled their monthly internet use over phone and cable lines in the past year, consuming the equivalent of 81 hours of downloaded video, according to data compiled from 200 Sandvine customers.

Netflix CEO Reed Hastings said on Oct. 23 that despite more competition, many of his 30 million customers continue to watch more thanks to a mix of "better exclusive content, better member experience, and a clearer brand identity."

"We are working to expand these advantages to win even more of these moments of truth when consumers decide on any given evening what service they turn to first when looking for entertainment," Mr. Hastings said.

Joris Evers, a spokesman for Netflix, declined to comment on the Sandvine report.

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Bloomberg News

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