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What those PwC-Netflix stories yesterday didn’t mention

Please note the TiceVision blog is on a reduced publication schedule through Jan 2.

Yesterday, there were a raft of stories about a new PwC report that claimed Netflix now equaled pay TV subscribers. This seemed a bit off to me, based on my own research done earlier this year, and my recall of Netflix’s own numbers. For Q3 2017, Netflix reported 53 million US subscribers – roughly 20% of the 250 million adults in the US or, if you assume one sub per home, 40% of US households. Even accounting for churn over a survey period and people sharing passwords, how did, as these articles reported, PwC end up with 73% of Americans being Netflix users?

I decided to dig a little deeper, which many of the reporters seem unwilling – or not aware enough – to do. The digging showed a different picture than painted in many of the articles.

Sample

The first big consideration is that on the PwC page describing the study, it does clearly state that the sample are people age 18-59 who have a household income over $40,000/year – far from a representative sample of all Americans or all households. Perhaps some reporters may have mentioned that, but none of the half dozen articles I read had made that distinction. This is important, since that age range and income bracket would be much more likely to subscribe to have internet in the home and thus able to subscribe to Netflix.

Method

Another aspect not discussed anywhere in PwC’s landing page for the report or the downloaded report itself is the methodology or sample used. I’ll presume it was an online sample. Again, this would not be representative of Americans as a whole and since by definition online sample consists of only internet users, this sample would of course more likely to subscribe to or use Netflix. And no mention anywhere if Spanish-dominant persons were interviewed to be inclusive of “all” Americans.

Terminology

Another issue in the press articles is that the terms Netflix “subscribers” and “users” were used indiscriminately – some used one of those terms, some the other. The PwC report specifically has the term “users” – an important distinction the reporters for some articles missed, as users may or may not be subscribers (in past research I found about 15% of Netflix users say they use other people’s logins). But by using “subscribers,” some of the reporters add to the misinterpretation of the data. And in neither the articles nor the PwC supporting material is how “users” are defined – are these Netflix people “ever” users, regular users, or so forth? Or what is the difference in time spent for Netflix versus pay TV channels?

Always consider the limitations of any report

Words have meaning. Methods have consequences. Firms that publish – and the press that covers – reports such as these should keep that in mind. While this PwC study may show some interesting trends for the slice of the US public to which it applies, it should not be confused as a definitive profile of Americans’ access or usage, which is how many of the press articles presented it.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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