Netflix (NASDAQ: NFLX) has incurred a huge influence in the decline of linear pay-TV. But acceleration of that impact will probably slow down, as the SVOD service is forced to infiltrate homes with less affluent and older consumers.
This is the point put forth Thursday by media analyst Michael Nathanson. In his latest blog post, titled Is Netflix Killing TV?, Nathanson continues a thread first put forth late last year by analyst Todd Juenger.
The difference now, of course, is that Juenger's hypothesis--that the growth of Netflix into a streaming platform that serves more than 40 million U.S. subscribers is taking a direct toll on linear viewership--is no longer controversial. It's mainstream thought.
Nathanson largely comes to the same conclusion: investors egged programmers on for the last five years as they enhanced earnings per share with SVOD deals. But those agreements ultimately came back to bite them in the rear, with linear viewership, particularly of repeat programming, currently in free-fall.
He finds that linear viewership among 18-24-year-olds fell 15 percent from September 2013 to March 2015, for example.
Nathanson adds to the analysis, however, by predicting a slow-down of this negative effect.
"The upshot of this analysis reveals that the next leg of growth for Netflix and its competitors will likely have to come from poorer and older households, which could prove difficult as these demos are traditionally the hardest to penetrate," Nathanson wrote. "If this assumption holds true, then perhaps the majority of the pain is already behind us."
According to the analyst, while 74 percent of U.S. homes run by consumers under 35 have SVOD, only 44 percent of those run by individuals ages 55-64 have SVOD access. The number drops to 28 percent for those 65 and older.
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