Study Shows Netflix Stealing Viewers from VOD and Cable

Study Shows Netflix Stealing Viewers from VOD and Cable

Jun 21, 2012

Netflix logoA new study shows that Netflix’s Watch Instantly program is cannibalizing viewers from more traditional vieweing outlets like premium cable providers and Video-On-Demand services. Does this mean Hollywood will finally get serious about updating its outdated business and distribution models?

The research conducted by Parks Associates found that the low cost and viewing flexibility of Netflix’s Instant Watch make up for some of the service’s other shortcomings – and that many viewers will choose it over the other options despite the issues.

Research director Brett Sappington sums it up by saying “consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies." For that monthly price, the viewer can then watch as many movies as they choose – making Netflix Streaming a cheap option for people who want to watch a lot of content.

The research indicates that many consumers are willing to make concessions in terms of picture quality for the cheaper price and control over their viewing. While the Netflix offerings don’t look as sharp as their VOD and cable counterparts, the tradeoff seems to appeal to consumers.

The study found that 16% of Broadband users watching VOD consider using a subscription-based service like Netflix instead. The number jumps to 17% when it comes to programs on Premium Cable.

John Barrett, the Director of Consumer Analytics for the company adds, “Pay-TV providers need to develop alternative services that counter Netflix's advantages in cost and flexibility.”

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Some of them are doing just that. Dish Network offers its Blockbuster Streaming service to subscribers, and Verizon and Redbox have teamed up to launch their own service before the end of the year. Cable provider Comcast has also joined the fray – as have Premium Cable channels like HBO. The benefit for Netflix is that they’ve had a huge head start. Whether or not Netflix can utilize that early momentum and brand recognition to fend off their new competitors remains to be seen, but it is nice to see that traditional content providers are starting to make the leap into the streaming market.

It’s impossible to predict a winner at this stage of the game, but one important factor will be not only who provides the best service for the cheapest price, but who offers the most content. Netflix has lost a considerable number of movies as contracts with studios have expired. What was once a great service for cinephiles has since become home to a hodge-podge of older and less-than-mainstream titles and an abundance of television episodes. One key to catching – or beating – Netflix will involve offering the widest variety of viewing material for an affordable price.

Regardless of how things play out, it appears that more and more studios and cable providers are realizing that streaming movies isn’t a fad – it’s the way many people want to view their entertainment. Seeing them finally acknowledging this fact is a step in the right direction for customers.

Check out the full Parks Associates report for all kinds of interesting insights about how we view our entertainment and then let us know what you think. Do you prefer the streaming experience over the more traditional VOD and Premium Cable? Does the difference in terms of picture quality ever affect your decisions? 

[via FierceCable]

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