The second half of 2011 was not very kind to Netflix, but despite the price hike snafu and ill-conceived Qwikster idea, it appears that the service is still humming along, even with a few recent content-related obstacles.
Rival HBO and content providers like Warner Brothers, however, are not exactly making it easy for Netflix to bounce back.
Netflix this week revealed that subscribers watched more than two billion hours of movies and TV shows in the fourth quarter—the same quarter the company lost approximately 800,000 customers due to its missteps.
This data suggests that "Netflix streaming usage is exploding and is far, far bigger than traditional media executives give it credit for," BTIG analyst Richard Greenfield wrote in a blog post.
Greenfield suggested that Netflix would be the 15th most-watched network based on hours watched.
"Netflix had more hours of viewing in October than FX, HGTV and History and had more than 2x the viewer hours of CNN, Discovery, MSNBC and BET," Greenfield wrote. "Pretty amazing, given that Netflix is only in 21 mm homes (with its streaming service just four years old) compared to the near-complete distribution across multichannel homes of the top cable networks."
But while that is likely is cutting into the time that people would otherwise be watching shows on TV, Netflix only accounts for 2.4 percent of total average TV or video-on-demand viewing, he said.
Furthermore, it doesn't appear that the average American family is ready to part with their TV sets and officially cut the cord. According to a Friday report from Nielsen, 35.9 million U.S. households have four or more televisions; 290 million have at least one set.
They are using those sets, however, to hook up to Internet services. Netflix was the top online video destination by time spent per month, with the average viewer watching just over 10 minutes of content, followed by YouTube with almost three minutes, Nielsen said.
Half of Netflix users are accessing streaming content via their video-game console, 42 percent watch via their computers, 14 percent hook up their laptops to the TV, and 6 percent use an Internet-enabled TV, Nielsen found. About 1.2 million people use a standalone device like a Boxee Box or Apple TV.
The growth of Netflix has caused concern among movie studios that would prefer you buy a copy of their movies than rent them. A top Sony Pictures executive told PCMag this week that the price of a digital movie is too high and must be reduced to offset the significantly lower price of online rentals.
In the meantime, however, it appears that the strategy is to withhold content for as long as possible. HBO said this week that it will no longer provide discounted DVDs of its TV shows to Netflix. There's nothing to stop Netflix from loaning its existing inventory to customers and buying future seasons at full price, however, so the move is basically symbolic, The Hollywood Reporter said.
HBO has never been a huge fan of Netflix. The company has refused to allow its shows to be streamed via Watch Instantly, opting instead for its own streaming platform, HBO GO, via cable providers.
Meanwhile, Warner Brothers will now make Netflix, Redbox, and Blockbuster wait 56 days before they can start offering new releases to rent instead of the previous 28 days, according to All Things D.
The moves come as Netflix is moving into original content itself. On Feb. 6, the company will post the eight-episode run of Lilyhammer, which follows a New York mobster who enters witness protection in Norway. Later this year, meanwhile, Netflix will debut House of Cards, which will star Kevin Spacey as a politician with his eye on the top job in U.S. politics.
In November, Netflix also said new episodes of the critically acclaimed but short-lived series Arrested Development will be distributed exclusively via the company's DVD delivery and streaming video services beginning in the first half of 2013.