It faces an army of new competitors, but streaming giant Netflix (NFLX -0.73%) is still the first name consumers choose when picking a new on-demand video service. It's also the one they're least likely to cancel.
That's the takeaway from a recent survey conducted by television market research outfit Hub Research. In a survey of November's additions and subtractions of TV services among U.S. households, Hub found that 49% of consumers making a change to their mix added Netflix, by far the most common change. Likewise, November's least popular change was cancelling Netflix as only 5% of consumers surveyed said they made that choice.
Unsurprisingly, cable television -- traditional or virtual -- remains the least popular play.
Image source: Getty Images.
It's just one piece of evidence, but the survey demonstrates Netflix still has an advantage over competitors. It's also evidence that jibes with other data produced this year suggesting Netflix is the streaming service all other streamers have to beat if they're hoping for market dominance.
Netflix is still the stickiest
Credit has to be given where it's due. Walt Disney (DIS -0.12%) also had a good November showing in Hub Research's "Predicting the Pandemic" study -- Disney+ was added by 34% of U.S. consumers making some sort of change to their video-entertainment mix and only cancelled by 7%. Hulu was also only cancelled by 7% of these households but added by 29% of respondents. Amazon (AMZN 3.96%) Prime was picked up by 24% of viewers and dropped by 8%.
Meanwhile, streaming cable was cancelled by 50% of respondents and added by only 19%. Traditional, linear cable saw 32% of viewers cancel their service, while just 15% added it.
No matter how you slice it, Netflix came out on top.
It's not the first time we've seen Netflix shine despite new challengers. Numbers from subscription market analytics firm ANTENNA, collected during the third quarter of this year, indicated Netflix's churn rate of around 4% remains the lowest in the business, despite a wave of cancellations linked to its controversial Cuties film.
"Churn" is a measure of how many people cancel a subscription service during a particular time frame, even if those numbers are offset by new paying customers. For perspective, ANTENNA reported a third-quarter churn rate of around 6% for Disney+, and Hulu was in the same ballpark. Since September's short-lived surge in Netflix cancellations, the streaming platform returned to its more typical (and industry-low) churn rate of 3.1% in October.
Although Netflix's subscriber growth may have slowed dramatically last quarter, no streaming name does a better job of keeping paying customers on board.
Different data, same story
This achievement is supported by the fact that Netflix remains the most popular streaming platform in the all-important U.S. market.
Though ANTENNA reports its total share of streaming subscriptions has fallen from 48% in the third quarter of 2019 to 35% this year, that's a function of the sheer number of new premium on-demand offerings that have materialized. NPD Group, a market research company, recently reported the average U.S. consumer now regularly uses seven different streaming video services (free and paid), up from five in April, shortly after the COVID-19 pandemic took hold. Netflix still enjoys the most market share of the increasingly crowded subscription video on demand (SVOD) market. Hulu is catching up, but it only accounts for 20% of the industry's U.S. subscriptions.
Although the advent of free, ad-supported alternatives have also cut into its overall share, Netflix's total share of "streaming activity" in the third quarter was still a market-leading 25%, according to TV and film search engine Reelgood. Amazon Prime was a close second at 21%. Disney+ and Hulu accounted for 6% and 15% of activity, respectively, based on the data provided by two million U.S. Reelgood users.
Prime's progress could be concerning on the surface, but know this: A lot more Netflix subscribers are also Prime customers than the other way around. Digital video search site JustWatch recently reported nearly 96% of U.S. Prime users are also Netflix customers, but only 61% of Netflix subscribers are also enrolled in Prime. No other streaming service even comes close to that level of overlapping dual usage. The nearest competitors are Disney+ and Hulu, but only 13% of Disney+ users are also Prime customers, and only 11% of Hulu subscribers also pay for Netflix.
Invest in the best of the best
Never say never -- other streaming platforms may eventually figure out how to dethrone Netflix. In fact, eMarketer suggested this week that Disney+ will catch up to Netflix within a couple of years based on U.S. streaming revenue.
Much can happen in two years, and Disney's ascent isn't guaranteed (price hikes for its streaming service may not go over as well as the company hopes). That means Netflix is still the streaming name to beat and the top investment choice in this space.
