Even as more competitors enter the fray, Netflix continues to dominate the competition according to a recent report.
According to a survey from research firm NPD Group, the majority of respondents, 61 percent, used Netflix as its digital movie provider. Comcast followed Netflix in distant second place with eight percent. DirecTV, Time Warner Cable, and Apple's iTunes were tied for third place with four percent each. NPD Group says the digital options are beginning to take hold, which has been advantageous for Netflix and its increasingly popular streaming option.
Sales of DVDs and Blu-ray Discs still drive most home-video revenue, but VOD and other digital options are now beginning to make inroads with consumers, Russ Crupnick, entertainment industry analyst for NPD, said in a statement. Overwhelmingly digital movie buyers do not believe physical discs are out of fashion, but their digital transactions were motivated by the immediate access and ease of acquisition provided by streaming and downloading digital video files.
Meanwhile, Goldman Sachs analyst Ingrid Chung upgraded Netflix from neutral to buy. This upgrade caused the digital video provider's stock to soar. At the end of day trading, Netflix's stock was up $15.91 per share from the beginning of the day, an eight percent increase. Overall, the company's stock, which sits at $217.11, has risen $147.51 per share, or 212 percent, year-over-year.
Like NPD Group, Chung said more people are increasingly watching video content via digital methods. She said 27 percent of US consumers now stream television shows or movies over the Internet, up from 16 percent a year ago. Even with many competitors entering the market, she doesn't see them as a major threat to Netflix, since the industry is growing.
We believe that the demand for video streaming could be big enough to sustain multiple business models and competitors and that these models can co-exist, Chung said in a note. We believe that as each quarter passes, it becomes more difficult for a new entrant to compete, as Netflix has 20 million subscriptions and could add at least two to four million subscriptions per quarter.