Are Netflix and Cable Operators At War?

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• June 16, 2011

As the entertainment world continues to fragment there is growing concern and questions over consumer habits. Conventional wisdom seemed to say that added choices meant engaged TV/video viewers would watch more across all distribution channels. However, recent Nielsen SoundScan research and reports from The Diffusion Group are beginning to question that supposition.

For example, the recent Diffusion Group report showed that Netflix customers who stream content over the Internet are “more than twice as likely” to drop some of their pay TV services. A recent article in TheWrap.com noted, 32% of those streaming Netflix content are likely to downgrade other paid video services which is a 100% increase over last year.

Nielsen SoundScan has also said it sees, especially among consumers in the 18-34 demo, a growing trend of either/or between regular TV and online video. The findings, as reported on Billboard.com, are not chord cutting, but rather a subtle shift driven by cost savings.

However, other findings still show viewing on the rise in all areas leading some cable execs unconcerned. Time Warner Chief Research Officer Jack Wakshlag dismissed the new research telling Billboard, it’s, “Not something we view as destructive or damaging.”

But  TDG researcher Michael Greeson says TV and Netflix will have to acknowledge their adversarial relationship. “Both Netflix and PayTV 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.”

 

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David M. Ross has been covering Nashville's music industry for over 25 years. dross@musicrow.com

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