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 A cottage industry of companies has sprung up to fill that
vacuum. Firms like Apptopia, Sensor Tower and App Annie, born
years ago to track how many people download mobile apps, are now
playing a bigger role in the streaming war that kicks into gear
this year as AT&T Inc's WarnerMedia and Comcast Corp-owned
NBCUniversal launch new services.
These firms sell mobile download data they arrive at by applying
algorithmic magic to publicly available data and data from other
apps. The process is propriety, they say, and opaque to
outsiders.
The resulting figures - which are approximations of mobile
downloads, not the new subscribers the companies disclose - do
not correlate exactly with subscriber growth, but are
influential.
Third-party data is widely reported in the press, including in
Reuters stories. Bloomberg offers Apptopia's mobile data to its
clients. The data is also cited in research from Wall Street
firms including Credit Suisse, Bank of America and Wells Fargo -
sometimes as a worthwhile indication of performance, and other
times dismissively.
The data moves markets: On Nov. 26, shortly after Apptopia
released data indicating that Disney+ was averaging nearly a
million new subscribers a day – a report that was covered widely
in the press – Disney shares rose 2.3% to $153.43, setting a new
record high.
To survey how often these firms get it right, Reuters reviewed
eight quarters of data from Netflix, and the same amount of data
from two of the third-party app measurement firms. It found that
Sensor Tower's past eight quarters' of Netflix mobile download
data has directionally if not precisely mirrored Netflix global
paid membership growth. Apptopia download data mirrored it
directionally in all but two quarters. (Graphic: https://tmsnrt.rs/34qdgDV)
https://fingfx.thomsonreuters.com/
gfx/editorcharts/APPLE-RESULTS/0H001QXGE979/eikon.png
Even so, the data is controversial: critics say these firms do a
poor job of tracking how many people drop a streaming service,
and as such, should not be viewed as a proxy for growth.
"If we had based our conclusions on app download data, we'd be
very incorrect about what Netflix is doing and everything in any
given quarter," said MoffettNathanson analyst Michael Nathanson,
who said his firm had used Apptopia and Sensor Tower, but no
longer does so.
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Netflix did not respond to requests for comment. Disney and App
Annie declined to comment.
Executives from Sensor Tower and Apptopia emphasize that the data
reflects trends, not precise growth.
"The reason people like and trust the mobile data is that mobile
gets the most screen time -- it's indicative of how people are
living their lives," says Adam Blacker, a vice president at Apptopia.
"What we're doing is nailing the trends and the percentage swings."
Recent quarters of Netflix mobile download data from Apptopia and
Sensor Tower, while directionally mostly correct, have been off in
notable ways. Apptopia recorded negative download growth for Netflix
in the second and fourth quarters of 2019 -- compared to the 22% and
20% global paid membership growth the company reported,
respectively. In the third quarter of 2019, Apptopia reported
single-digit growth compared with an increase of 21% reported by
Netflix.
"We're not going to be right 100% of the time," says Blacker about
those quarters. "We're not going to tell you to trade on download
data."
Sensor Tower reported single-digit global mobile app install growth
for Netflix in the second and fourth quarters of 2019, compared with
growth of 22% and 20%, respectively, reported by Netflix.
"We're only looking at mobile," said Randy Nelson, head of mobile
insights at Sensor Tower. "We only capture that first time install -
it could be someone downloading on their phone; could be someone
who’s been a Netflix subscriber for a while but never put it on
their phone. That and the fact our figures are estimates is it will
never be 1 to 1.”
Despite that limitation, the data may become more ubiquitous as new
streaming services launch.
"I think everyone's looking for an edge on subscribers," says
Nathanson. "These stocks trade on subscribers."
(Reporting by Helen Coster in New York and Neha Malara in Bengaluru;
Editing by Kenneth Li and Lisa Shumaker)
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