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Netflix Main Cause Of TV Ratings Drop

Netflix is responsible for a big chunk of the ratings declines registered by the traditional TV networks, and its share of viewership is likely to grow.

In a report provocatively titled “Is Netflix Killing TV?” Michael Nathanson of MoffettNathanson Research looked at Nielsen viewing data and corporate financial data to measure the impact of the streaming service and its SVOD rivals.

In its most recent earnings report last week, Netflix exceeded expectations for subscriber growth both in the U.S. and abroad.

Nathanson said that “the next leg of growth for Netflix and its competitors will likely have to come from poorer and older households, which could prove difficult as these demos are traditionally the hardest to penetrate. If this assumption holds true, then perhaps the majority of the pain is already behind us.”

Netflix accounts for 6% of total traditional TV viewing in 1Q 2015, according to Nathanson’s calculations, and after adjusting for last year’s Sochi Olympics, represented 43% of the quarter’s linear TV viewing decline.

“Going forward, we believe that Netflix hours streamed per sub will continue to grow, albeit at a lower rate while TV usage will directionally continue to drop. As a result, we believe Netflix’s  U.S. total streaming hours relative to traditional TV will steadily rise to the low double-digit range over the next four years, representing the majority of the declines in traditional TV viewing."

The emergence of Netflix and other SVOD players had obvious effects on the ratings of general entertainment cable networks that featured a lot of off-net repeats like TBS, TNT, USA and TV Land. Those networks turned to a shift in programming strategy to more original content, and a move toward owning content rather than licensing it.

For broadcast networks, ratings for reruns of drama series fell with viewers who could watch entire seasons of these shows via SVOD or DVRs.

Most of the kids channels were also impacted, SVOD making a lot of programming available and easy to find by parents and children.

Jon Lafayette
Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.