Eighty-one percent of all U.S. smartphone users stream video on their devices, The NPD Group reported this week, and users who are 25 years old and younger spend twice as much time watching video from YouTube and Netflix mobile apps than their older counterparts do.
And all that mobile video consumption is creating opportunities for OTT video providers such as Netflix, according to a new MoffettNathanson research note.
Video-hungry mobile users under the age of 25 consume an average of 6.2 GB of data over cellular and Wi-Fi connections to watch streamed content on mobile screens, NPD reported, and older smartphone users chew through an average of 4.9 GB every month on streaming video. And smartphone users are increasingly relying on cellular connections for such activities, using 3 GB per month over mobile networks. Video streaming is the top application driving that consumption, NPD said.
Increasing demand around the world for Netflix's mobile content is offsetting the company's slowing growth in the U.S., MoffettNathanson wrote. Citing data from the mobile app measurement company Apptopia, the analyst firm said domestic downloads of Netflix's mobile apps are down 6 percent in the U.S., "much better than Netflix's implied 1Q15 guidance of -23 percent." The app saw growth in Latin America (showing a 15 percent increase in downloads year-over-year) and Europe (48 percent growth year-over-year), and 700,000 downloads in Asia Pacific after launches in Australia, New Zealand and Japan.
The firm maintained its neutral rating on Netflix, however, with a target price of $85.
Netflix earlier this year announced its global expansion into more than 100 countries.
But while the demand for mobile video is clearly soaring, it's still far from clear how mobile network operators can monetize the trend beyond simply charging for bits and bytes. Verizon's Go90 doesn't appear to have gained much traction, and AT&T's ambitious plan to leverage its DirecTV acquisition with a three-tiered mobile video service won't come to market until late this year.
T-Mobile's Binge On has clearly become popular with mobile video fans, but that offering is aimed at attracting new customers and keeping existing ones rather than creating an entirely new revenue stream. So mobile video revenues remain elusive for carriers that have long dreamt of tapping that market.
- see this NPD report
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