Netflix (NASDAQ:NFLX) gained a lot of new competitors over the last 15 months or so, and there are still more coming. A lot was made over the potential subscriber loss Netflix could face as low-cost competition stole subscribers away from the market leader.
It turns out that didn't happen. People just started spending more on streaming.
Adding more streaming services to the lineup
With a flurry of new streaming services entering the market, consumers didn't cancel and substitute existing streaming services. About half of American households subscribed to four or more streaming services in December, according to a survey from J.D. Power. That's up from an average of three services per household in April.
Additionally, consumers are paying an average of $47 per month for their various streaming subscriptions. That's a 24% increase from the $38 per month they were spending in April.
Granted, it's easy to find room to spend an extra $9 per month on one more streaming service if you're not going out to the movies or dining out. But when we can do other activities to fill our time on a Friday night besides binge-watching Bridgerton, we might cut back our spending and streaming time to pre-pandemic levels.
The question for Netflix is whether consumers will prefer the new competitors over the stalwart streamer now that they've had a sampling of what else is available. If J.D. Power's data is anything to go by, the answer is no. What's more, it's likely spending on streaming -- both in terms of time and money -- could remain elevated compared to 2019.
Netflix is still the centerpiece
While consumers are using more streaming services, Netflix remains at the center of most households' video lineups. Eighty-one percent of respondents said they have access to Netflix, far more than any competitor. The next closest is Amazon (NASDAQ:AMZN) Prime (65%), and then Disney's (NYSE:DIS) Hulu (56%) and Disney+ (47%).
Netflix also racks up more streaming hours than any on-demand service. The average household reports watching 9.5 hours of Netflix per week. The next closest are Hulu (7.6 hours per week), Amazon Prime (5.8), and Disney+ (5).
While both numbers are down from those found in J.D. Power's April survey, Netflix still has most of the popular shows available across all streaming services. Nine of survey respondents' 13 top shows are available on Netflix. That's going to make it hard to give up, even if users are splitting their attention between Netflix and other services.
More streaming is here to stay
There's a good likelihood consumers don't cancel any of their streaming services even as other pre-pandemic entertainment options reopen. A lot of the behaviors we've adopted over the last year -- like shopping online more and telecommuting -- are probably going to stick around to some degree. Streaming is no different.
Paying for an extra streaming service may be worth it if it allows you to ditch your $100-per-month cable bundle. Over one-fourth of U.S. households are planning to cut the cord this year, and they'll make up for some of that couch time and entertainment spending with additional streaming services.
The pandemic behavior shows consumers are willing to pay for new streaming services if they present additional value to them. That doesn't necessarily mean it comes at the expense of other streaming services they already subscribe to like Netflix. There can and will be multiple winners in streaming.
Netflix is most likely to present outsize value versus competing media companies, retaining a presence in most households even if it's priced at a premium. As product chief Greg Peters said on its most recent earnings call, "We do think we're an incredible entertainment value, and we want to remain incredible entertainment value."