Netflix Surpasses Traditional Video Subscriptions As It Reaches 20 Million Subscribers

Netflix Inc. has posted a 52% profit jump and a 34% revenue increase in the fourth quarter of 2010, which plants the 13-year-old media company in a top spot for media subscription services.

Traditional video services Showtime and Starz have 18.5 million and 17.4 million subscribers respectively, and Netflix came in at 20 million in 2010, with over three million being added just during the holiday season.

Netflix expected to grow as it increased its video on demand streaming service, starting at just $7.99 per month, but only predicted a 3.6 million increase in new subscribers. The total for 2010 turned out to be 7.7 million.

The boom in Internet video overall contributed to Netflix’s growth, CEO Reed Hasting was careful to point out. The overall acceptance of video on demand as a desirable media form influenced Netflix’s growth. Still, their impressive growth spells good news for on demand content which, in turn, may influence more entertainment companies to offer licenses to Netflix and other services.

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Advertisers Get Creative to Reach Out to DVR Users

Digital Video Recorders (DVRs) can be found in nearly 40 percent of American homes, and their ability to let viewers fast-forward through commercials has had advertisers worried. However, according to a recent Nielsen report, advertisers have several options for attracting DVR audiences.

Many major advertisers have started using contextual advertising to showcase products and companies within the context of the show. For example, a Toyota Corolla zooms to the rescue of characters on AMC’s The Walking Dead. The ad is part of the show so even DVR users see it.

The report also noted that advertisers may not have much to worry about when it comes to their traditional ads being skipped. The largest segment of DVR owners – 18 to 49 year olds – is actually less likely to skip through the commercials. The ratings for the commercials for prime-time shows rise by 44 percent when the playback within three days is counted. This indicates that the DVR users are actually watching more TV and commercials than they would otherwise.

About the Author: Peter Koeppel is Founder and President of Koeppel Direct, a leader in drtv media buying, marketing, campaign management and creative strategies.

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