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The cord cutting argument – two more voices in favor

Netflix customers do have a tendency to drop or more likely, downgrade their pay TV services, that’s the conclusion that US researcher The Diffusion G

By PETER WHITE

Published: 16 June, 2011

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Netflix customers do have a tendency to drop or more likely, downgrade their pay TV services, that’s the conclusion that US researcher The Diffusion Group reached after interviewing a number of Netflix users. It says that during the past 12 months the inclination to downgrade PayTV services has doubled among this group.

It started off with a random sampling of adult broadband users who have pay TV asking if they plan to downgrade in the next six months in a survey held both this year and last . The number saying yes went up from 2010 to 2011 from 16% in to 32%.

Netflix can say what it likes, but there is a definitive Netflix effect, where the process of growing used to streamed TV services eventually makes a family think less of their reliance on a pay TV operator. Netflix has always maintained that it has no intention of getting people to cut the cord and that it thinks this won’t happen. Well it’s wrong according to TDG.

“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.”

Most other researchers point to this being a time of difficult financial stress for US homes and believe there is no underlying tendency to cut the cord. TDG partly confirms this saying that by digging a little deeper it becomes obvious that people cite the “cost of service” and “the need to save money.” But a larger group of Netflix users, some 34% say it is their growing use of online video which is the culprit, and two-thirds of these mention Netflix by name.

The more people use Netflix, the more likely they are to downgrade, and among this group of high volume users 61% say the growing use of online video is the primary reason for a likely downgrade and less of these mention economic concerns. TDG’s report is called Profiling Netflix Streamers, 2011.

In another poll by Harris this week (which we have never trusted with these issues really even since it got confused between IPTV and Web TV in one survey) it concludes that 77 % of Americans have watched a TV show on the Internet and some 56% would stop paying for cable, under certain conditions – some say (44%) they would cut the cord if all the same content was available on the internet, and others (25%) say only if it was available at the same time on the internet. While a handful (16%) said they would do so if they could get all the programs they wanted for a small online fee or if it was less complicated to set up than it is today..

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