Netflix Takes Toll on Pay-TV

Despite recent moves to swing carriage deals with cable operators, Netflix is continuing to wreak havoc on the US pay-TV business. (See Netflix Cracks Top 10 MSO.)

Nearly half (or 48%) of all non-pay-TV subscribers now get streaming video service from Netflix Inc. (Nasdaq: NFLX), according to the latest report from Leichtman Research Group Inc. (LRG) . That's up from 29% in 2012 and just 16% in 2010, suggesting that more consumers are turning to online video subscription services such as Netflix, Hulu LLC 's Hulu Plus, and Amazon.com Inc. (Nasdaq: AMZN)'s Amazon Prime instead of signing up for traditional pay-TV services from cable operators, satellite TV providers, and telcos.

At the same time, the number of Netflix customers who also subscribe to traditional pay-TV services dropped to 80% in the new Leichtman survey, down from 85% in 2012 and 88% in 2010. These results suggest that more Netflix customers are dropping their pay-TV subscriptions, either because of the expense or because they no longer see the need for them.

In another result reflecting the explosive growth of Netflix and other over-the-top (OTT) video services, the Leichtman study found that almost half (49%) of all US households now have at least one TV set hooked up to the Internet through a video-game system, Blu-ray player, smart TV set, online media streamer, and/or an HDMI streaming stick like the popular Google (Nasdaq: GOOG) Chromecast. That's up from 38% in 2012 and 24% in 2010.

Also, slightly more than a third (34%) of US adults now watch OTT video daily and slightly over three-fifths (61%) of adults watch OTT on a weekly basis, up significantly from two years ago. That OTT viewing is spread among a growing range of video-capable connected devices, including connected TVs, tablets, home computers, smartphones, and e-readers.

Finally, the Leichtman study found that most Netflix subscribers watch the online streaming service on TV sets. Close to four-fifths (78%) of Netflix users say they view the service on their big home screens, while nearly half (49%) of Netflix users watch the service on a connected TV set each week.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

MikeP688 7/3/2014 | 1:42:53 PM
Re: For whom the Netflix tolls ..and sports continues to be ever so growing as exemplified by the Dodger Network, by the 2 Billion Clipper Purchase/etc.   But, even then, there is always an APP, live feeds over the Net that could indeed circumvent it--going direct it seems could work much better than a middleman.  Time will tell!!

Happy 4th to all =)
Mitch Wagner 7/3/2014 | 1:39:15 PM
Re: For whom the Netflix tolls MikeP688 - Live sporting events seem to be a big factor keeping people from cutting the cord. 
geo tv 7/2/2014 | 5:33:06 AM
TV Net US subscriber additions for pay-TV operators fell by nearly 350,000 in Q2 2012, the largest subscriber drop in history,

 as weakening economic conditions and strengthening competition from over-the-top (OTT) players like Netflix continue to work against cable operators and even against the satellite segment, according to recent research from IHS Screen Digest.
MikeP688 6/30/2014 | 11:18:44 PM
Re: For whom the Netflix tolls As someone in the "firing line" of trying to assess this (and be among the cord-cutting generation) I am of the view of the providers will continue to somehow figure out the Revenue Stream.   The problem is quality.  As an example, AT&T was featuring a free week-end of ENCORE (one of the myriad of offerings from John Malone) and although I "DVR'd" Russia House, I went thru the entire week-end offering and could only find 3 movies.     Why should I want to pay $ 30/Month when I can get a broader selection for like $ 9?   I will not be able to get "local breaking news"--oh well.     

May we live in interesting times--and we are..aren't we?


Mitch Wagner 6/11/2014 | 1:33:32 PM
For whom the Netflix tolls Does this hurt pay TV providers? They're also selling internet access with which to view Netflix.
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