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