Netflix (Nasdaq: NFLX) may be stickier than you think.

The video service that's been abandoned by investors in recent months apparently hasn't been deserted by its customers. CEO Reed Hastings revealed on Tuesday that the company served up more than a billion hours of monthly streams for the first time in June.

"Congrats to Ted Sarandos, and his amazing content licensing team," Hastings writes on Facebook, giving props to his Chief Content Officer. "When House of Cards and Arrested Development debut, we'll blow these records away. Keep going, Ted, we need even more!"

The billion stream march
Let's put this into its appropriate mind-blowing perspective.

The only service serving up as many hours of streaming entertainment is Pandora Media (NYSE: P), which crossed the billion monthly hours milestone a few months ago. The big difference here is that the vast majority of the music discovery site's users are freeloaders. There's actually a cover charge to get into the Netflix smorgasbord.

Pandora actually has more than twice as many active registered users as Netflix has paying subscribers. In other words, Netflix accounts are really using the service. By the end of March, there were 23.4 million domestic streaming accounts, and another 3.1 million international users. In other words, the average customer is going through nearly 38 hours of content of programming a month. At $7.99 a month, that breaks out to roughly $0.21 per hour of content. That's obviously cheaper than pay-per-view and even Redbox. Netflix is a pretty darn good value.

Revisiting churn
BTIG analyst Richard Greenfield takes things one step further. By his calculations, Netflix is now the most watched network -- pitted against individual broadcasters and cable networks -- in homes that have a Netflix subscription.

This may not seem like too big of a deal. The industry's cord-cutting fears have largely gone away, and the temporary dip in pay television viewers two years ago has been widely dismissed as a byproduct of the economic slowdown rather than a meaningful paradigm shift. However, if people are consuming more Netflix, doesn't it mean that they're spending less time on their costlier cable or satellite television plans? And, if relying less on expensive cable plans isn't enough to get viewers to rip up their bills, what will this mean for the much cheaper Netflix that has now become the most popular "channel" for active subscribers?

When Netflix stopped issuing churn -- the monthly metric revealing the service's retention rate -- cynics figured that the company wanted to stop divulging what would be worsening news. Even bulls assumed that this was the case. Customers would go through the thinner streaming catalog more quickly than the disc-based offering. Even a quick DVD watcher can't go through 38 hours of disc-based content in any given month. It's also easier to cancel a streaming account than it is a disc-based service with DVDs and Blu-rays in transit.

However, if folks aren't cancelling the cable and satellite services that they are using less, why would they nix the Netflix service that they are using more?

It's a good time to be sticky
Netflix's magnetic ways come at a great time. Yes, House of Cards is coming later this year -- and Arrested Development following next year -- but the competition is also coming.

  • Redbox parent Coinstar (Nasdaq: CSTR) expects to launch a streaming service during the second half of this year. For those scoring at home, the second half of 2012 began a few days ago. It's not coming along. The Redbox-branded service will be majority owned by Verizon (NYSE: VZ), the wireless carrier giant with a user base that is more than four times larger than Netflix's rolls.
  • (Nasdaq: AMZN) continues to build up the digital catalog that it makes available to Amazon Prime shoppers at no additional cost. The library is no match to what Netflix offers, but it's cheaper and getting easier to use.
  • We also can't dismiss the tech giants making major moves into the smart television niche. You don't think that they'll be coming empty-handed, do you?

The strong usage should bode well for retention and top-line growth that Netflix will report on July 24 for the quarter that concluded over the weekend. Be careful, shorts. There's no telling how the international losses will eat into stateside profitability, but healthy usage indicates that subscribers didn't bolt the way they did last summer. 

However, now that Netflix has made it a precedent in announcing that a billion hours were streamed last month, it will be important to keep reporting that metric. As the competition cuts in, Netflix will need to prove that it's still as sticky as flypaper.

Stream on
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