New research may indicate that Netflix’s appeal vis-à-vis HBO, Showtime and pay-per-view films is less than expected, given the relatively low cost. Parks Associates found that 17% of those watching HBO and other premium networks consider going with Netflix instead.
Also, 16% of broadband users consider going with an online video-on-demand service while watching a movie via traditional VOD.
Still, Parks Associates said its research shows that consumers appreciate the lower cost of Netflix and “viewing flexibility,” which leads to higher customer satisfaction than other services.
"Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies," stated Brett Sappington, the director of research at Parks.
He added that research shows “consumers know the quality” of Netflix is less than pay TV, “but the cost-benefit comparison is enough to affect their purchase decisions."
Netflix does suffer from lesser “picture quality,” stated Parks Associates’ John Barrett, although he added: “Pay-TV providers need to develop alternative services that counter Netflix's advantages in cost and flexibility."
Some efforts are underway by cable and other operators to offer their own over-the-top services, but Parks Associates said the initiatives are hurt because the brands have far less awareness than Netflix, including Comcast and Dish Network. Those, however, are only available to subscribers.
Well-funded Verizon and Redbox, which has marketing advantages with machines nationwide, are planning a Netflix-style stand-alone streaming service for later this year. If priced in line with Netflix, it could pose a serious challenge.