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Proclivity to downgrade pay TV services increasing among Netflix streamers: TDG

Bapun Raz

Staff member
3 Nov 2010
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MUMBAI: The inclination to downgrade pay TV services has doubled in the last 12 months, according to The Diffusion Group’s (TDG’s) latest analysis of Netflix Streamers—those that stream Netflix content to their net-connected devices. In general, the percentage of Netflix streamers to varying degrees likely to downgrade their Pay TV service increased from 16 per cent in 2010 to 32 per cent in 2011. Though Netflix has gone to great lengths to reassure Pay TV operators that its offerings are additive to regular TV viewing and thus not a competitive threat, research now suggests that the ‘Netflix Effect’—that is, growing use of Netflix will lead to pay TV service downgrades and even cancellation—is gaining momentum. TDG founding partner and director of research Michael Greeson said, “Despite its rhetorical positioning, both Netflix and pay TV operators have long been aware that there will come a point at which its services are not only dilutive to regular TV viewing, but antithetical to PayTV subscription levels. The question for realistic observers has been not if this will occur but when. According to our latest research, that time is upon us.” While research continues to suggest that such tendencies are due primarily to economic belt tightening, TDG discovered that the primary rationale varies by frequency of Netflix streaming. For example, close to half of all Netflix streamers likely to downgrade their Pay TV service in the next six months cite “cost of service” and “the need to save money” as the primary reason for this disposition. Conversely, 34 per cent cite their growing use of online video as the culprit, two-thirds of which cite Netflix in particular as the primary perpetrator. Among moderate and heavy Netflix streamers likely to downgrade, however, 61 per cent cite growing use of online video as the primary reason for likely downgrade (two-thirds of which cite Netflix use in particular). Only 24 per cent of moderate and heavy Netflix streamers cite economic concerns as their primary motivation for downgrade.

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