Report: Netflix Streamers Inclined to Downgrade Pay-TV Services

FRISCO: In a survey of users of Netflix’s streaming services, Texas-based research firm The Diffusion Group has found that 32 percent are likely to downgrade their pay-TV subscription—either to a lower tier or by canceling a premium service—as compared with just 16 percent last year.

"The Netflix Effect," TDG notes, is gaining momentum. And while economic belt-tightening is a factor for those considering downgrading their pay-TV, the primary rationale varies by frequency of Netflix streaming. TDG notes, for example, that almost 50 percent of 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, while 34 percent cite their growing use of online video. However, among moderate and heavy Netflix streamers, 61 percent list online video as the main reason for considering downgrading, and just 24 percent cite the need for cost cutting.

"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," says Michael Greeson, TDG’s 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."