Survey: Netflix Is The Leading Video Service, But There Is Room For Competitors

By Markets Fool.com

Netflix dominates the paid on-demand video market, but a new survey shows that consumers who use this type of product do not limit themselves to one service.

Continue Reading Below

That means that despite the popular service's dominance, room exists for more than one winner -- perhaps even a few. That's good news not just for streaming alternatives like Hulu Plus,Amazon(NASDAQ: AMZN) Prime Instant Video, and HBO's digital offerings, but also for classic paid choices like Outerwall's (NASDAQ: OUTR)Redbox DVD rentals, Apple's(NASDAQ: AAPL) iTunes, and cable TV's on-demand offerings.

Consumers have shown a willingness to pay money for video from multiple providers, according to new research from Consumer Intelligence Research Partners.

Source: CIRP

"Consumers need more than one on-demand service, and even more than one subscription or per-use service," said Josh Lowitz, Partner and Co-Founder of CIRP. "No single service meets all of a consumer's needs, so they tend to create a 'market basket' that combines services."

Continue Reading Below

Who is using which service?
CIRP found that only 25% of paid on-demand video consumers use only a single on-demand video provider, while 50% use three or more paid video-on-demand services.

The survey CIRP conducted was not of the general public, but people who used at least one of ten on-demand video content services at least once in the three months preceding the survey. The services include Netflix, Hulu Plus, HBO Go, iTunes, cable and satellite paid on-demand, Redbox and other disk rental, and Amazon Prime and Amazon Instant Video.

Source:CIRP

Of those users, Netflix and Redbox had the largest percentage of consumers actively using their service, with 61% of those surveyed using Netflix and 49% using Redbox. That's good news for Netflix and Redbox, but the results also showed that though they dominate the market, the two leaders leave the door open for other companies to have a piece of the pie.

For example, 77% of Netflix subscribers also make use of at least one per-use, non-subscription service, and 74% have at least one other subscription service.Redbox has similar numbers, as 73% of its users also pay for at least one subscription service, and 67% use at least one other per-use service.

Among people who pay for video content, the numbers suggest that there is a willingness to try different services and go where the content is.

"No one service truly dominates," said Mike Levin, Partner and Co-Founder of CIRP. "While Netflix and Redbox each have the largest penetration among subscription and per-use services, even their customers use other services extensively."

Good news for Amazon
Amazon is the one company CIRP examined that owns both a subscription-based product (Prime Video) and a per-use one, which the survey refers to as simply Instant Video. The CIRP data shows that the existence of one enhances the other.

"Among AmazonInstant Video customers, while 95% have a subscription service, most use at least Amazon Prime as that service," according to CIRP.

That makes sense, because renting a video from the online retailer is an easy process that's very similar to watching content on a subscription service. Having a successful rental experience shows customers that Prime Video is easy to use. The subscription decision is also likely easier to make when a piece of available rental video would be "free" if the user had a Prime subscription.

It's a wide-open marketplace
What the CIRP survey really shows is that no one paid video service can meet most consumers' needs. In order to deliver all the desired video content people must mix and match between multiple subscription and per-use services.

It's also notable that the dominance of Netflix and Redbox has actually been good for other companies. Adoption of one service appears to lead to a willingness to use others, which grows the overall market.

Paid video is not cable TV where one subscription meets all needs. That leaves a wide open marketplace where success by one company can actually make it easier for others.

The article Survey: Netflix Is The Leading Video Service, But There Is Room For Competitors originally appeared on Fool.com.

Daniel Kline owns shares of Apple. He is a Netflix and Amazon Prime subscriber who rarely remembers to use either. The Motley Fool recommends Amazon.com, Apple, and Netflix. The Motley Fool owns shares of Amazon.com, Apple, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.