Netflix doing booming business in Canada, industry research reports suggest

Netflix Inc.’s official Canadian subscriber numbers may be top secret, but new estimates suggest the online streaming service is booming north of the border with more than 6 million customers.

Two independent reports released Tuesday by Toronto-based Solutions Research Group (SRG) and Victoria-based Convergence Research Group estimate a growing Canadian user base for the Los Gatos, Calif., company.

“Post Christmas in early 2018, we’ve seen a record jump in Netflix use,” SRG stated in its research note on digital life based on a February online survey of 1,000 Canadians older than 12.

More than half of Canadian households with an internet subscription (57 per cent or 6.7 million) said they streamed Netflix in the past month, up from 48 per cent in October. SRG estimated Netflix’s total subscriber count at 6.1 million in Canada, excluding multiple households that use the same account.

Convergence Research Group estimates an even higher number of Canadian Netflix subscribers at 6.7 million, up from 6.4 million at the end of 2017, founder Brahm Eiley said in an email.

The reports came a day after Netflix announced that it had 7.4 million new subscribers in first quarter — 5.46 million based outside the U.S. That’s a 50 per cent increase from last year despite price increases that helped boost streaming revenue 43 per cent to US$3.6 billion. Those results sent the company’s shares soaring up more than nine per cent on Tuesday, closing at US$336.06 in New York.

The growth comes as Canadian telecom and cable providers increasingly focus on selling high-speed internet products — all the better to stream video content on multiple devices — as television subscription revenue stagnates. Its ever-larger presence is forcing the government and creative industries to grapple with disruption in the production and consumption of Canadian content.

More Canadians are exclusively relying on the internet and forgoing TV subscriptions, SRG reported.

“We’ve observed the highest level of single-play internet-only households (no paid TV) we have ever seen in Canada,” SRG stated.

About one in five (19.6 per cent) of households with internet did not have a TV subscription, up from 16.5 per cent last year and 10.5 per cent five years ago.

Even those with TV subscriptions opt to sign up for online streaming as well, with 58 per cent also subscribing to services such as Netflix, Club Illico and Sportsnet Now, according to CBC/Radio-Canada’s Media Technology Monitor fall survey.

Netflix may be the largest, but it’s just one of 24 over-the-top video providers in Canada such as CraveTV, DAZN and Amazon Prime. Revenue for the entire streaming industry surged 29 per cent to $872 million in 2017, according to Convergence estimates. (It did not include revenue from Amazon Prime, as that service didn’t increase its price when it added video content to the membership.)

“We forecast in 2020 there will be more (over-the-top) subscriber households than TV subscribers in Canada,” Eiley said.

Television subscribers are slowly dwindling in Canada, according to research reports, financial statements and the federal broadcast regulator. The Canadian Radio-television and Telecommunications Commission said 76.2 per cent of households subscribed to TV packages as of Aug. 31, 2016, down from 82.8 per cent in 2012. Convergence estimates that percentage dropped to 71.9 per cent by the end of 2017.

Eiley predicts it could get even tougher for TV providers as more online streaming players enter the market. CBS All Access announced plans to come to Canada in June, and Disney plans to stream its content directly to consumers by 2019, although it’s unclear when or whether it will offer the service in Canada.