January 25, 2023
Netflix Use Up, Doesn't Impact Pay TV
- by Wayne Friedman , July 10, 2015
Netflix may have very little effect on traditional pay TV business -- at least according to a new study. In contrast to many industry estimates, The Diffusion Group found that cable, satellite and IPTV use among Netflix homes declined only marginally to 2015 from 2012.
Surveying 3,428 consumers this year, the research firm found that 84% of the subscription video-on-demand service's customers also subscribing to a traditional pay TV service.
This is down -- but only three percentage points from 2012. Surveying 2,001 U.S. consumers three years before, TDG found that 87% of Netflix users also subscribed to a pay-TV service.
"So much for the hypothesis that Netflix use leads to the cancellation of legacy pay-TV services," says Nick Beyer, analyst and author for TDG.
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That said, there is a greater difference when looking at pay TV users who use Netflix: The percentage of pay-TV homes using Netflix has substantially increased to 49% from 36%. Netflix ended 2014 at around 40 million users up from 27.1 million in 2012.
While the TDG study focused on the cord-cutting effect that some pay TV providers has been enduring, other studies/research has focused on actual viewing declines Netflix seems to have cause for some TV networks.
Between 2012 and 2015 -- as the TDG study notes -- the use of Netflix streaming increased by one-third to 50% of U.S. adult broadband users from 38%.
Barnum said there's one born every minute. Why should Netflix streaming challenge HBO? There are only two successful shows on Netflix streaming, Orange is the New Black and House of Cards. Though the variety of DVDs on Netflix's DVD only service is shrinking, the selection is far larger than movies and television available on its streaming service. Amazon offers a far wider streaming selection at essentially the same price, $99, masked as a yearly free Amazon products delivery service. Meanwhile, delivery from Amazon is usually free anyway if the product price is $25 or more. Netflix is gobbling up European markets with these gimmicks as we speak. HBO and Showtime are joining the streaming race. But HBO profits $220 million while Netflix's profits are negligible. Is there a race to the bottom buried in these success stories?