Americans remain somewhat divided on their favorite streaming service, but they have a clear pick when it comes to which one they like the least. A new report from Strategy Analytics measured customer satisfaction in 14 categories across three key areas: the number and availability of TV shows/films, how easy it is to find them, and the overall value of the service. Time Warner's (NYSE: TWX) HBO Now won the most categories, taking 11 out of 14, but Netflix (NASDAQ: NFLX) received the highest score when it came to overall satisfaction.
Continue Reading Below
Both Netflix and HBO Now can stake a claim as having the top service, and Hulu made a strong case for third place, beating Netflix in six of 14 categories and scoring top marks in children's programming. Amazon Prime, however, consistently brought up the rear, ranking last in all 14 categories among the four services rated.
"HBO Now has successfully positioned itself as a go-to-service for quality programs, especially movies," said Strategy Analytics analyst Zhaowen Wu in the press release. "Though HBO Now has a much smaller library than other SVOD [subscription video on demand] services, it has more blockbuster movies and hit series such as Game of Thrones and Westworld."
Image source: Strategy Analytics.
HBO is the big winner
HBO's stand-alone streaming service was a late entry to the field, first launching in April 2015. The company was late to the party because it did not want to upset its cable partners, which had long sold the channel as a premium service. That legacy as a cable product may be the only reason Netflix scored a victory in overall customer satisfaction, according to Strategy Analytics Digital Media Strategies Director Michael Goodman.
Continue Reading Below
"When considering the bigger picture, Netflix clearly benefits from its brand 'halo' while HBO Now suffers from a negative association with cable's legacy issues," he said. "However, once one gets into the weeds, the reality is that HBO subscribers are the most satisfied with nearly all elements that make up a strong SVOD service."
Goodman did point out that the overall difference in scores is relatively small. He also explained that while Amazon was the clear loser in the report, the fact that the video service is just one element of the company's Prime membership means its members "may actually be the least likely to churn, particularly as they're the most likely to have household incomes above $100,000."
Netflix ranked highest for overall satisfaction. Image source: Netflix.
Which services will people get?
HBO Now costs more than any of its rivals at $14.99 a month. Hulu costs $7.99 with commercials or $11.99 without while Netflix charges $9.99 a month, and Prime costs $99 a year (or it can be purchased for $10.99 a month) and includes other perks like free two-day shipping. Goodman acknowledged that many consumers will buy more than one streaming subscription, but he sees HBO as potentially emerging as the top choice.
"People have been talking about it being a Netflix vs. Amazon battle in terms of which service viewers choose, with the others left to pick up the scraps," he said. "However, if HBO continues on this vein, we're more likely to see a situation where people will have one 'blockbuster' service like HBO or HBO Now and either a Netflix or Amazon in support."
That interpretation would ring more true if Netflix did not already have 47.91 million U.S. subscribers, a gain of nearly 2 million paying customers in Q4. Time Warner does not report HBO Now subscribers, but the number was estimated at about 1 million in March 2016. That's not a representative picture of how many people are watching because HBO still has tens of millions of traditional cable subscribers.
There will be more than one winner
What's clear from this report is that both HBO and Netflix are considered top-tier streaming services by consumers while Prime and Hulu sit at least a slight tick below. In a market where people are dropping cable subscriptions that cost more than $100 a month on average, it seems likely that both HBO and Netflix can be winners.
In fact, given how closely these scores are grouped and the fact that the key driver for many Prime customers is free shipping, it's possible that all four of these services will continue to grow. Paying for all four would cost $45.22 a month (prorated for paying $99 for Prime all at once) and it can be argued that just getting all four costs well less than cable while offering a comparable, if not a better, array of entertainment is a big win.
Find out why Netflix is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. (In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the market!*)
Tom and David just revealed their ten top stock picks for investors to buy right now. Netflix is on the list -- but there are nine others you may be overlooking.
*Stock Advisor returns as of January 4, 2017
Daniel Kline has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com and Netflix. The Motley Fool recommends Time Warner. The Motley Fool has a disclosure policy.