Here’s more ammo for those who hold the still-controversial view that digital video services pose a major threat to conventional pay TV. Netflix says that the 20M subscribers to its streaming service in 45 countries watched more than 2B hours of movies and TV shows in last three months of 2011. That would make Netflix the 15th most popular TV network in the U.S. — ahead of FX, HGTV, and History Channel — BTIG analyst Rich Greenfield says based on his back-of-the-envelope calculations, including the reasonable assumption that the “vast majority” of the streaming subs were based here. What’s more, he figures that in homes that receive Netflix, it would be the second-most-watched TV service behind CBS. “With Netflix viewing at these levels, it simply CANNOT be all incremental” — meaning that some of it comes from people who spend less time time with traditional TV — Greenfield says. He adds that “Netflix streaming usage is exploding and is far, far bigger than traditional media executives give it credit for.” For example, he notes that Time Warner CEO Jeff Bewkes recently said that Netflix is probably the 50th most watched network.
Consulting firm Deloitte offers additional evidence today indicating that digital video is a threat to conventional TV. Its annual “State of Media Democracy” study of consumer media usage shows that 42% of consumers say that they streamed a movie from the Internet in the six months leading up to last fall, when the survey was taken. That’s up from 32% in 2010 and 28% in 2009. In addition, 22% watched a TV show from a free online service last year. The bottom line: 9% of the 2,215 people questioned said that that they recently canceled their pay TV subscriptions “because I can watch all/most of my favorite TV shows online” — and another 11% said they’re considering doing so.