New research from The Diffusion Group (TDG) has found that the inclination of the growing band of Netflix users to downgrade pay-TV services, if not cut the cord totally, has doubled over the last twelve months.
Fundamentally TDG’s survey, Profiling Netflix Streamers 2011, found that the percentage of Netflix users likely to downgrade their pay-TV service increased from 16% in 2010 to 32% in 2011. The research firm had asked broadband users that subscribe to cable, satellite, or telco TV service as to the likelihood they would downgrade their pay-TV service in the next six months, specifically whether they would move from a higher service tier to a lower one, or cancel a premium service of some kind.
TDG also discovered that the primary rationale for cutting the cord varies by frequency of Netflix streaming. The survey found that nearly half of all Netflix users likely to downgrade their pay-TV service in the next six months cited cost and the need to save money as the primary reason for switching off.
Just over a third (34%) of all Netflix users cite their growing use of online video as the main driver for cutting back, and two-thirds of these cite Netflix in particular as the primary online vide source they use. Among moderate and heavy Netflix users likely to downgrade, a significant 61% cite growing use of online video as the primary reason for likely downgrade. Only a quarter 24% of moderate and heavy Netflix users cited economic concerns as their primary motivation for downgrade.
Such findings will likely strike fear into TV operators to whom, especially over the last six months, Netflix has given repeated assurances that its service was a complement to traditional TV and would not eat into revenue streams.
"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 pay-TV subscription levels," notes Michael Greeson, TDG founding partner and director of research. "The question for realistic observers has been not if this will occur but when. According to our latest research, that time is upon us."