Shares of Netflix (NFLX 0.53%), Coinstar (OUTR), and Blockbuster parent Dish Network (DISH) stumbled early yesterday -- though Redbox parent Coinstar clawed its way back up for a positive close -- on grim video consumption trends.
Piper Jaffray analyst Michael Olson issued a cautious note yesterday, leaning on NPD Group data showing a decline in visits to the Netflix, Redbox, and Blockbuster websites.
The report, as retold by Barron's Tech Trader Daily blog, finds that year-over-year traffic growth to Netflix was a mere 2% in October and November before slipping in December. Unique visitors during the quarter fell by 4%, but that doesn't mean that revenue is slipping. Year-over-year traffic also declined during the second and third quarters, but Netflix still managed double-digit percentage growth on the top line.
The news is scarier for Coinstar's flagship DVD rental service, as Redbox.com traffic fell 13% during the quarter.
Piper Jaffray is taking the data in stride. Olson is eyeing a 24% pop in domestic streaming subscribers at Netflix and a 13% surge in revenue for Redbox.
Blockbuster.com, on the other hand, suffered a brutal 25% plunge in traffic. Traffic was actually trending higher earlier in the year for the fledgling DVD service, but apparently all of the store closures and watching NCR (VYX 1.82%) unload the Blockbuster Express kiosks to Coinstar has destroyed interest in the fading store chain.
Investors should always take these third-party reports in stride. They will rarely be entirely accurate, and obviously there's more to these video services than website traffic suggests.
Until there's material weakness in the actual financials -- as we saw in Netflix late last year before it bounced back -- these trend reports are worth taking in, but any investing implications are often best ignored.
