Report: Netflix Costs TV Nets Billions; YouTube TV Adds Turner, Raises Prices

watching video

SAN FRANCISCO – Netflix is taking billions of dollars a year away from traditional TV advertising revenue as a result of viewing on its platform – viewing that in the past would have gone to ad-supported TV networks, according to a report from nScreenMedia.

Digital media analyst Colin Dixon, who wrote the report, does the math this way: the average U.S. Netflix subscriber misses about 35 commercials per day. For all of Netflix’s U.S. subscribers (56.4 million), this equals nearly 2 billion ad views per day.

In a year, the average Netflix U.S. subscriber misses 5,753 ads during prime-time viewing and 7,032 ads during non-prime time. Using the cost-per-thousand metric of $18 in prime time and $5 for non-prime time programming, these missed ad views equal $7.6 billion for all subscribers.

Dixon says his analysis assumes Netflix viewing replaces only ad-supported television viewing. “It doesn’t consider ad-skipping through DVRs, though Nielsen says the average U.S. adult only spends about 10 percent of TV viewing time on DVRs,” he says. “It also doesn’t consider the use of premium video networks like HBO and Showtime. These factors could lower the calculated value of lost ads by 15 percent to 20 percent.”

Also, in the report, Dixon mentions John Martin, CEO of Turner Networks, who’s been working to compete with ad-free subscription video-on-demand (SVOD) by making ads more relevant to viewers. However, at CES 2018 he said the TV industry wasn’t moving fast enough: “My fear, and what makes me wake up with the sweats, is like when the industry finally figures out how to get full addressability, everybody’s going to be watching video on Hulu and Netflix.”

In other SVOD news, YouTube TV, the company’s over-the-top streaming video bundle, is adding channels from the Turner Broadcasting portfolio and raising prices.

Beginning next month, YouTube TV will start at $40 per month, up from $35, but it will be adding three channels: Turner’s TNT, TBS, and CNN. The company also plans to add MLB Network and NBA TV.

In all, YouTube TV will feature 60 channels available in 100 local markets.

Price increases are also slated from traditional pay-TV providers Comcast, DirecTV, and Cox Communications. The hikes will be in the $1 to $5-per-month range. Dish Network is reportedly raising prices by 15 percent.