There are a lot of reasons to choose streaming video services over cable: it's more affordable, content stops and starts when you want it, your entertainment goes wherever your mobile device does, and so on. But one particularly appealing consequence of the cord cutting revolution is the sharp dive in time spent watching commercials. In fact, avoiding commercials has become a major goal of many streamers – which has prompted services like Hulu and YouTube to develop ad-free options.
Netflix, the oldest and best-known of the streaming services, has always been commercial free. Perhaps that's why its users believe that Netflix can eventually completely replace cable. One thing is for sure: Netflix is saving its subscribers from an awful lot of commercial time.
But exactly how many hours of commercials are subscribers saving relative to those watching traditional cable TV? That's something we can calculate pretty easily by combining Netflix viewership data with what we know about the frequency of commercials on cable TV.
First of all, we know that Netflix recently passed the 75 million subscriber mark. And, at around the same time, Netflix CEO Reed Hastings said that Netflix subscribers stream 125 million hours of content every day. So, with some simple arithmetic, we can calculate that 125 million hours spread across 75 million subscribers is 1 and 2/3 hours per subscriber per day.
From Nielsen, we know that a typical hour of cable TV includes 15 minutes, 38 seconds – or 938 seconds – of commercials. Multiply that figure by 1.67 repeating and you get 1,563.3 (also repeating) seconds of commercials per day. That's 570,616.7 seconds per year, which works out to 158.5 hours. So each subscriber saves him or herself about 160 hours of commercials per year by streaming their content through Netflix.
To put that in perspective, the average American workweek is 34.4 hours. Netflix is saving its subscribers 4.6 work weeks' worth of commercials each year!
Think of all of those subscribers saving all of that commercial time, and you start to see why TV advertising is becoming a trickier game. Remember, the entire subscriber base watches 125 million hours per day. We know that there are 15 minutes, 38 seconds (or 938 seconds) of commercials in the average cable hour, so we can say that Netflix subscribers worldwide skip a total of 117,250 million seconds – or 32,569,444.4 hours – of TV commercials each and every day.
On top of all of this, it's worth remembering that our calculations are showing how many hours of ads Netflix viewers replace with show and movie content. That is, our numbers show how many commercials Netflix viewers skip per hour of viewing, not per hour of content. In a given hour of viewing, Netflix subscribers don't just see 15 minutes, 38 seconds fewer of commercials than cable TV subscribers – they also see 15 minutes, 38 seconds more of whatever they're actually watching.
With some help from the DVR, Netflix has changed the TV advertising game by taking tons of customers away from live TV. Hours spent watching ad-free Netflix are hours that consumers won't spend watching traditional TV, and that has advertisers feeling a little desperate. We've seen the few remaining “appointment viewing programs” rise in value in recent years, with the most glaring example being the so-called “live sports bubble.”
Sports and the other remaining appointment viewing programs aside, it's clear that Netflix's commercial-free model is making a huge impact on the industry and on the ad consumption of its subscribers. And, according to our calculations, Netflix's impact on the advertising world is only becoming greater.
The inspiration for this post was an excellent article that Exstreamist published last summer on the same topic. Exstreamist calculated that Netflix saved subscribers 130 hours of commercials a year – 30 hours less than we found today.