Netflix Inc. (NASDAQ: NFLX) just hit another milestone.
In a press release touting the streamer's most-watched programming, Netflix shared this juicy nugget: Its members watched more than 1 billion hours a week of its content this year. With an average membership base over the year of a little more than 100 million people, that means Netflix members spend an average of 10 hours using the streaming service each week.
In other words, Netflix continues to offer a value proposition unlike any seen before in video entertainment.
CEO and Co-Founder Reed Hastings launched Netflix with a similar value-enhancing idea. Miffed by late fees at his local Blockbuster, Hastings believed a DVD-by-mail service that charged a monthly subscription fee would be a better way. And so Netflix was born.
Image source: Netflix.
The hard numbers
Netflix subscribers hardly flinched at the latest price hike, which lifted rates on its most popular package from $10 per month to $11 per month, and it's easy to see why. Not only is Netflix a much better deal than the Blockbuster-style video-store model it put out of business, but it remains an incredible value compared to traditional Pay-TV packages as the chart below shows.
| Service | Typical price | Cost per hour of entertainment |
|---|---|---|
| Netflix | $11/month | $0.25 |
| Blockbuster | $5/rental | $2.50 |
| Cable TV | $103/month | $0.69 (Based on five hours of TV per day) |
Source: Various industry reports
As you can see, Netflix is an outright bargain compared with both the traditional video-store model and a cable package. The addictive nature of TV, seen in the average of 5 hours that Americans spend watching the tube, may explain why Americans have been relatively slow to cut the cord even while the country has quickly adopted Netflix and other streaming services. After all, Netflix launched its streaming-only service just six years ago in what was seen as a debacle at the time as it doubled prices on customers who kept both streaming and the DVD-by-mail subscription. Today, it counts nearly half of American households as members, which doesn't include password sharers, with 53 million as of last count, and that number continues to grow by nearly 10% a year.
Also notable, Netflix subscribers do not have to watch commercials, unlike cable viewers, making the service an even better deal than the price tag itself connotes.
Image source: Netflix.
The next challenge
At this point, Netflix is an undeniable cultural and financial success. Its service is a staple of home entertainment and the brand has even entered the lexicon in phrases like "Netflix and Chill." The stock, meanwhile, has been a rocket ship since its 2002 IPO, and today the company is worth $80 billion, more than traditional entertainment titans like Time Warner (NYSE: TWX) and 21st Century Fox.