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Netflix users finding traditional pay-TV less attractive

July 1, 2015

More Netflix users in the US are officially cutting the cord than ever before. In a survey of 829 current Netflix subscribers, CutCableToday found that just 67 per cent still have a pay-TV service (cable or satellite), and of those, 9 per cent plan to cancel their pay TV service and another 16 per cent are unsure if they will still have their pay-TV within the next year.
For years, Netflix has claimed its service is complementary to cable and satellite and not a direct competitor, but the data shows things are rapidly changing. Netflix users are increasingly finding traditional pay-TV less attractive, opting instead to rely on Netflix’s rapidly-expanding library of on-demand content and other similar streaming services to fulfil their entertainment needs.

Key Findings
While most Netflix subscribers also have pay-TV, the number is rapidly declining.
  • 67 per cent of Netflix users also have pay-TV service, but of these, 9 per cent are likely to cancel and another 16 per cent are unsure if they will still have their pay-TV service 12 months from now.
  • Netflix may have started out as a complementary service to cable and satellite TV, but make no mistake, the streaming service is now luring subscribers from pay-TV in droves. “Our research shows that just two-thirds of Netflix subscribers still have pay TV and we expect that number to steadily decline moving forward,” says the advisory service.“I have cancelled all of my pay services except internet and Netflix. I use Netflix and online sites to watch TV and movies. The availability of programming for free online makes the high cost of cable and satellite not worth it.” (Female, 25-34)

    Netflix subscribers with pay-TV are usually locked into a bundle with their service provider.

    77 per cent of Netflix subscribers with cable or satellite have their pay-TV bundled with their internet and/or phone service.

    Perhaps the most effective weapon pay-TV providers have against cord cutting is the service bundle. Three out of four Netflix subscribers who also have pay-TV service are locked into a bundle deal, relying on their provider for pay-TV plus internet and/or phone service. Bundled service plans are notoriously difficult to break, penalising cord cutters with higher internet prices when they cancel their pay TV.

    “A lot of people only retain cable or satellite because of the internet bundle.” (Male, 45-54)

    Netflix users are very satisfied with the streaming service and plan to keep it.

    92 per cent of subscribers said they are satisfied with Netflix, and 93 per cent said they are likely to still have it 12 months from now.

    Consumers love Netflix, and subscribers are incredibly loyal to the service. Even in the midst of a controversy for testing advertisements (or “trailers” as the company likes to call them) before and after its shows, Netflix still satisfies nine out of 10 subscribers.

    “I cut the cord. I have an indoor antenna and Netflix. I don’t need anything else.” (Male, 35-44)

    “Over the past few months, we watch less ‘television’ and more Netflix.” (Female, 25-34)

    Netflix users are often subscribed to other streaming services.

    Amazon Prime Instant Video is the most popular streaming service among Netflix users, with 47 per cent subscribing to the service.

    As Netflix users cut the cord of pay TV, they are using other streaming services to complement their Netflix subscription. Streaming video apps like Amazon Prime Instant Video, HBO Now, and Hulu give subscribers access to other TV shows, movies, and content they are interested in watching that may not be on Netflix.

    We pay for Netflix, Hulu Plus, Amazon Prime and pay for Comcast Internet. Our bill went from $220 per month to $60 per month.” (Male, 35-44)

    Netflix subscribers rank “Quality Content” and “Price” as two most important features when choosing a paid video service.

    95 per cent rate “Quality Content” and 90 per cent rate “Price” as “Important” for any paid video service they are looking to purchase.

    Good content at a fair price — that’s what most Netflix subscribers really want. And that’s likely why a growing number of Netflix users are ditching pay TV in favour of streaming video services. Other important features for Netflix subscribers include on-demand content, a user-friendly system, and the ability to stream content to multiple devices.

    “Right now, my TV priority is finding good, reasonably priced children’s TV, and Netflix and Amazon scratch that itch.” (Female, 35-44)

    The Significance of These Findings

    As Netflix continues to offer its wide selection of TV shows and movies that people love (including its own growing series of Netflix Originals) at a low price, an increasing number of subscribers will see less of a need for expensive pay TV service, especially when they can add on other streaming services at a fraction of the cost. Cable and satellite TV companies might still dominate the video landscape, but they’re fighting a battle that’s getting more difficult by the day.



Categories: Articles, Broadcast, Consumer Behaviour, IPTV, OTT, Pay TV, Premium, Research, VOD