Raymond James' survey of media usage adds to never-stronger Netflix bull case

Investing.com -- Netflix (NASDAQ:NFLX)'s dominant position in the streaming landscape continues to strengthen, Raymond (NS:RYMD) James revealed in its 16th Semi-Annual Media Usage Survey.

A key finding from the December 2024 survey is Netflix’s rising penetration, which climbed to 56% from 50% in June 2024, marking a reversal after six consecutive declines. The service also holds the top spot as the "most valued" among respondents, with 51% indicating Netflix would be one of the three services they’d keep if forced to choose. This figure significantly outpaces Amazon (NASDAQ:AMZN) Prime (37%) and Hulu (25%).

Netflix’s ad-supported tier is also gaining traction. Approximately 68% of Netflix users reported utilizing the ad tier, up from 52% in June 2024, while an additional 11% expressed interest in potentially adopting it.

This combined figure of 79% marks a 12-point increase year-over-year, underscoring growing interest in cost-effective subscription options.

“Notably, the majority of incremental ad tier users switched from another Netflix plan rather than signing on from another service or external interest,” Raymond James’s report notes.

“Netflix has noted an ARPU (average revenue per unit) lift from Ads users vs. Basic subscription users, though Ads users are slightly ARPU-dilutive vs. Standard subscribers.”

According to Raymond James, consumer engagement with Netflix remains robust across demographics. Usage among younger viewers aged 18-29 rose five points to 57%, while older users saw a 13-point jump to the same level.

Moreover, the survey highlights challenges for other streaming platforms. Max, Peacock, and Paramount+ saw declines, with Peacock dropping the most to 11% from 15%, despite strong Olympic viewership.

All three remain in the low double digits to mid-teens, significantly behind Netflix (51%), Amazon Prime (37%), and Disney’s offerings (mid-20s). This raises questions about the market's ability to sustain so many services.

“We think consolidation among these three services is likely, and see a combination of Paramount+ and Peacock as particularly likely given the incoming new leadership at Paramount, the companies’ existing streaming partnership overseas, and Comcast (NASDAQ:CMCSA) expressing interest in this kind of partnership in Paramount’s S-4,” Raymond James’s report notes.

Meanwhile, broader market trends are improving, the report reveals, with viewership hours on the rise. More concretely, 75% of respondents said they watch two or more hours of video daily, compared to 70% in June 2024.